Retail inflation expected to ease to 5.5% in September: Report

India's retail inflation is expected to have dipped below 6% in September after two consecutive months above the central bank's tolerance threshold. This drop is attributed to declining prices for most essential commodities and food items, except for pulses, which have seen sustained price increases.

Economists from the Bank of Baroda, who monitor a monthly index of essential commodity prices, anticipate that consumer price inflation in September may have fallen to 5.7% from 6.8% in August and a 15-month high of 7.4% in July. Food inflation, which stood at around 10% in August, is expected to have moderated.

The National Statistical Office is scheduled to release the Consumer Price Index (CPI) data for September soon. The Reserve Bank of India's Monetary Policy Committee recently revised its average inflation projections for the July to September quarter to 6.4%, suggesting an expectation that September's retail inflation will be between 4.9% and 5%.

Economist Dipanwita Mazumdar of Bank of Baroda noted that price pressures eased in September, driven primarily by the reversal of prices for tomatoes, potatoes, and onions. This moderation in food prices is broad-based, and the favorable base effects from the same period last year, when inflation was at 7.4%, are expected to contribute to the lower headline inflation number.

Crisil report on Inflation

Additionally, a report on food costs by Crisil Market Intelligence and Analytics estimated a 17% decrease in the cost of vegetarian food in September compared to August, with non-vegetarian dishes becoming 9% cheaper. Lower tomato and LPG cylinder prices were cited as the main factors contributing to this price correction.