India Inflation Lowest In 11 Months; Falls Within RBI's Target Range

India’s consumer price inflation eased further in November to the lowest level in nearly a year and came within the Reserve Bank’s tolerance band of 2.0 to 6.0 percent for the first time this year, data released by the statistics ministry on Monday.?

Consumer price inflation slowed to 5.88 percent in November from 6.77 percent in October. Prices were forecast to rise 6.4 percent.

In the same month of 2021, consumer prices had increased 4.91 percent.

Likewise, food price inflation came in at 4.67 percent in November, down from 7.01 percent in the previous month and 1.87 percent in November 2021.

The Reserve Bank of India is set to hike the repo rate one more time, by 25 basis points in February, Capital Economics’ economist Shilan Shah said. However, there is a risk that the tightening cycle is already over, the economist noted.

Last week, the RBI said headline inflation is projected at 6.7 percent in 2022-23, with the third quarter figure seen at 6.6 percent and the fourth quarter inflation rate at 5.9 percent. CPI inflation for the first quarter 2023-24 is projected at 5.0 percent and price growth for the June quarter was seen at 5.4 percent, on the assumption of a normal monsoon.

The central bank slowed its rate hike cycle this month, although it raised its benchmark interest rates for the fifth policy meeting in a row on the backdrop of softness in the economic outlook.

Within major sub-groups of the consumer price index, fuel and light costs rose the most, by 10.62 percent, followed by a 9.83 percent gain in clothing and footwear.

The cost of housing rose 4.57 percent, and that of food and beverage prices climbed 5.07 percent.

Month-on-month, consumer prices edged down 0.11 percent, and the consumer food price index slid 0.90 percent in November.

India’s wholesale price inflation for the month of November is set to be released on December 14.