New Delhi, Oct 13 (PTI) Providing respite to common man ahead of Diwali, falling food prices pulled down the September retail inflation to 6.46 per cent, lowest since the new series of Consumer Price Index was released in January 2012, although experts do not see a rate cut by RBI any time soon. Although retail inflation, which has been on decline since July, is below the RBI target of 8 per cent by January 2015, experts said the central bank is expected to reduce interest in the next fiscal (2015-16) only.
The overall food inflation as measured by CPI fell to 7.67 per cent as against 9.35 per cent in the previous month and 11.75 per cent in September 2013. The retail inflation was at 7.73 per cent in August, revised downward from the earlier estimate of 7.8 per cent. As per the government data released today, the CPI inflation in vegetable basket in September fell to 8.59 per cent as against 15.15 per cent in the previous month.
Inflation in fruits slowed to 22.4 per cent from 24.27 per cent in August. Price rise in protein rich items like eggs, fish and meat was slower in September against August. "...while the RBI has become more proactive in providing liquidity to the banking system, it seems that lowering the policy interest rate will likely take place only in 2015. We expect the RBI to lower the repo rate by 50bp during H1 2015," said Barclays Research. Senior Economist with ICRA Aditi Nayar said CPI at a series-low 6.5 per cent in September provides some optimism in light of the near-stagnation in industrial output in July- August 2014. "We expect the RBI's January 2015 target of restricting CPI inflation below 8 per cent to be comfortably achieved. However, the likelihood of a repo rate cut in 2014-15 remains low," she added. In its last monetary policy, RBI had maintained status quo on interest rate citing worries on the inflation front despite industry demanding reduction. The next policy will be announced on December 2.