October CPI inflation is 4.8%, a 5-month low.

According to a survey of 15 economists, India’s Consumer Price Index (CPI)-based inflation likely dropped to a five-month low of 4.8% in October from 5.02% in September, mostly because of the statistical effect of a high base and a reduction in the prices of important vegetables. Thanks to a positive base effect, core inflation is probably going to stay flat this month.

Nevertheless, October of this year will see a sequential gain in the overall index of 0.6%, marking the first increase in three months. Retail inflation was 6.77 percent in October 2022. On Monday, the National Statistical Office will make available the CPI inflation figure for October.

Food inflation, which accounts for over 39% of the CPI, is predicted by the Centre for Monitoring Indian Economy (CMIE) to have decreased to a four-month low of 6.05% in October from 6.56% in September. The Department of Consumer Affairs reports that while potato prices stayed relatively stable in October, tomato retail prices fell by 24.5% month over month. Onion prices, however, increased 11.6% in a row.

Month-over-month, the prices of wheat and rice grew by 0.6% and 1.0%, respectively, while the price of pulses jumped by 2.0%. The Reserve Bank of India predicts that the headline CPI print would average 5.4% in FY24 due to the ongoing upward pressure on the cost of essential food products. The RBI believes that only in FY25 will CPI inflation drop below 4%.

However, given that grains, spices, and pulses account for 15% of the CPI basket and have all seen double-digit inflation rates in recent months, there is a chance that food inflation may remain above 6% in H2 FY24, endangering the RBI’s forecast.

Regarding energy, October saw a 6.2% month-over-month increase in kerosene prices, which may have had a minor impact on the month’s increase in fuel and light inflation. October saw an average price of $90.08 per barrel for India’s crude oil basket, the second consecutive month above the $90 threshold. It had averaged $93.54 per barrel in September.

Economists predict that core inflation, which does not include volatile items like food and gasoline, remained steady at 4.5% in October.

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