Business Other News 14 Oct 2016 Retail inflation tou ...

Retail inflation touches 1-year low

DECCAN CHRONICLE.
Published Oct 14, 2016, 2:22 am IST
Updated Oct 14, 2016, 3:49 am IST
The fall in retail inflation in September was mainly due to decline in vegetables prices.
Economists believe the first advance estimate of kharif crop production forecast should ease price pressures in the coming weeks
 Economists believe the first advance estimate of kharif crop production forecast should ease price pressures in the coming weeks

New Delhi: Retail inflation based on consumer price index (CPI) in September fell to 13-month low of 4.31 per cent raising hope of a deeper monetary easing after RBI Governor Urjit Patel made a surprise cut to interest rates this month. Retail inflation was 5.05 per cent in August. The fall in retail inflation in September was mainly due to decline in vegetables prices which contracted by 7 per cent.

Overall, the Consumer Food Price Index was down at 3.88 per cent compared with 5.91 per cent in August. However sugar inflation was up by 25.77 per cent in September. “As expected, we think the positive impact of a favourable monsoon this year is starting to reflect in lower food prices. Going ahead, we expect inflation to trend lower and average 4.8 percent in the second half of fiscal 2017, because of the good monsoon and supported by steps taken by the government to manage food supply,” said rating agency Crisil.

 

ICRA, senior economist Aditi Nayar said that first advance estimate of kharif crop production forecast a broad-based uptick in harvest of all crops, barring sugarcane, which should ease price pressures in the coming weeks. “This, in conjunction with the favourable base effect, should dampen food inflation further in the next two prints. Moreover, in month on month terms, data for October 2016 so far indicates a fall in prices of pulses (other than gram and arhar) as well as potatoes and onions. Rising global food prices remain a modest risk,” said Nayar. The Reserve Bank takes into account retail inflation while deciding on its key lending rate. It has been mandated to contain inflation at 4 per cent, within 2 per cent range on either side.

 

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