India's Consumer Price Index (CPI) eased further in the month of September, at 4.31% as against 5.05% in August and 4.41% in September 2015. said Ministry of Statistics and Programme Implementation (MOSPI) on Thursday. CPI is also known as retail inflation.
Rural CPI in September stood at 4.96% as against 5.87% in August and 5.05% during same period last year. Urban CPI in September stood at 3.64% as compared to 4.22% in August and 3.61% in September 2015.
Consumer Food Price Index (CFPI) stood at 3.88% for September, as against 5.91% in August and equal to September 2015.
Analysts expected that inflation is likely to fall to its one-year low as food prices have softened over the past few months, Reuters said.
A Reuters poll of 30 economists had suggested that retail inflation may have eased to 4.80% in September 2016 as against 5.05% in August 2016 and 4.41% in September of last year.
A Bloomberg poll had predicted that retail inflation may have fallen to 4.60% in September 2016. Industry experts had believed that an easing inflation might mean another interest rate cut by Reserve Bank of India (RBI) in December this year.
However, economists in the poll had expressed concern that prices could rise quickly after a pay hike for millions of government employees and pensioners, Reuters said.
The important point to look before the data is released is how the food inflation has reacted over the last one year. Food Inflation means rise in the prices of food articles or it is substantial rise of food articles over a period of time.
The cost of food in India increased 5.91% in August 2016 over the same month in the previous year. The food inflation in India averaged 8.46% from 2012 until 2016, which reached an all time high of 14.72% in November of 2013 and a record low of 2.15% in July of 2015, Trading Economics data showed.
As per the data, the food inflation is expected to be 8.10% by the end of this quarter. They estimate food inflation to stand at 8% in 12 months time. For long term, the country's food inflation is projected to trend around 3.30% in 2020.