In October, India's headline retail inflation is expected to drop to a five-month low, falling below the 5 per cent mark after a three-month hiatus.
As reported by Moneycontrol, a survey of 23 economists suggests that the Consumer Price Index (CPI) inflation might have eased to 4.8 per cent from September's 5.02 per cent.
The decline is attributed to a favorable base effect and reduced prices of certain items, notably tomatoes, which experienced a 62 per cent month-on-month (MoM) decrease in September and an additional 25 per cent drop in October.
However, the rise in onion prices, up 12 per cent MoM, for both September and October, restrained a sharper decline in inflation.
Food prices, on average, saw a slight uptick in October, primarily driven by onion prices, according to Kaushik Das, Deutsche Bank's chief economist for India and South Asia.
The high domestic onion prices are expected to persist until the end of the month due to delayed monsoons and unseasonal rainfall, with a reversal anticipated once the new harvest arrives in December.
While edible oil prices exerted downward pressure on inflation, other food items such as cereals (0.6-1 per cent) and pulses (0.8-3.7 per cent) witnessed a sequential increase in prices in October.
Fuel inflation is predicted to remain subdued, and core inflation (excluding food and fuel) is anticipated to ease further to under 4.5 per cent.
Rahul Bajoria, managing director and head of EM Asia (ex-China) economics at Barclays, highlighted that inflation in the cost of essential services like health and education persists.
If the forecast holds, October would mark the third consecutive month of declining inflation, with a majority of economists expecting it to be lower than September.
However, the headline retail inflation is poised to start its fifth consecutive year above the Reserve Bank of India's medium-term target of 4 per cent.
Nayan Dwivedi is Staff Writer at Swarajya.
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