The Consumer Price Index, which measures inflation in India, dropped to 4.31% in September from 5.05% in August, on the back of a normal monsoon and declining food prices.
Analysts had expected retail inflation to fall as the prospects of a bumper agricultural harvest had risen because of a good monsoon in the country. Around 86% of India has received rainfall between normal and excess levels, according to the Indian Meteorological Department.
The drop in inflation comes after the newly-formed Monetary Policy Committee slashed the Reserve Bank of India's key rates. The repo rate, which the RBI uses to lend to commercial banks, was reduced by 25 basis points (or 0.25%) to 6.25%. The repo rate helps control inflation, which is one of the central bank's major concerns. This was the first monetary policy review meet headed by the central bank's new governor, Urjit Patel.
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