India’s retail inflation eased to a three-month low of 5.02% in September due to a decline in vegetable prices, government data released on Thursday showed.
The price rise indicator was 6.83% in August and 7.44% in July. The Reserve Bank of India is tasked with keeping inflation at 4%, with a tolerance band between 2% and 6%.
Food inflation, which accounts for nearly half of the overall consumer price basket, moderated to 6.56% compared with 9.94% in August. Vegetable inflation crashed from 26.14% in August to 3.39% in September. Cereal prices came down to 10.95% from 11.85% in August.
Prices of pulses rose 16.38% in September as compared with 13.04% in the preceding month.
On October 6, the Reserve Bank of India kept the repo rate unchanged at 6.50% for the fourth consecutive time. The repo rate is the interest rate at which the central bank lends money to commercial banks.
Central banks typically increase key lending rates at times of high inflation in economies. Higher key lending rates translate into high interest on loans disbursed by commercial banks. This, in turn, keeps a check on discretionary spending by consumers.
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