India's CPI Inflation Drops Lowest In Four Months, At 4.87% In October 2023

India's consumer price index (CPI) inflation dropped to its lowest in four months 4.87% in October 2023 owing to a decline in various product categories. In the previous month, the retail inflation rate stood at 5.02%. Inflation is currently closer to RBI's medium-term target of 4% and below the upper tolerance limit for the second consecutive month.

Inflation stood at 6.77% in October last year.

In October 2023, retail inflation declined significantly in both rural and urban to 5.12% and 4.62% as compared to 5.33% and 4.65% in September 2023. In October of last year, rural and urban inflation stood at 6.98% and 6.50% respectively.

However, the consumer food inflation index (CFPI) came in at 6.61% in October 2023, which was broadly muted compared to the 6.62% print in September month. In October 2022, food inflation stood at 7.01%.

In category-wise, during October 2023, the food and beverages inflation rate stood at 6.24%, while the rate of pan, tobacco and intoxicants stood at 3.87%. The clothing and footwear inflation rate came in at 4.31%, and housing inflation was at 3.80%. Meanwhile, there was a deflation of 0.39% in the fuel and light category. Lastly, the miscellaneous inflation rate was at 4.40%.

As per Trading Economics, the cost of spices (22.76%), pulses (18.79%), cereals (10.65%), eggs (9.3%) and sugar (5.5%) remain elevated, as El Nino affected the production of Kharif crops this season, including pulses, cereals and sugar.

The price data are collected from selected 1114 urban Markets and 1181 villages covering all States/UTs through personal visits by field staff of the Field Operations Division of NSO, MoSPI on a weekly roster. During October 2023, NSO collected prices from 99.8% of villages and 98.6% of urban markets while the market-wise prices reported therein were 89.0% for rural and 92.0% for urban.

The next date of release for November 2023 inflation data is on December 12, 2023.

RBI's medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of plus or minus 2 per cent, while supporting growth.

RBI predicts CPI inflation at 5.4% for FY24 --- with Q2 inflation at 6.4%, Q3 rate at 5.6%, and Q4 estimated at 5.2%. RBI had factored CPI to be around 5.2% in the first quarter of FY25.