Vegetable prices drag inflation below 2% in Sep; gold inflation at record high, Pg15.

Key Highlights:

• India's retail inflation fell to 1.54% in September, an over eight-year low.
• Vegetable prices significantly decreased, with a year-on-year inflation rate of -21.38%.
• Food inflation dropped to -2.28%, the lowest since December 2018.
• Core inflation, excluding food and fuel, rose to 4.5%, driven by increasing gold prices.
• Gold inflation reached a record high of 46.87% in September.
• The Reserve Bank of India (RBI) maintained its repo rate at 5.5% on October 1.

Detailed Insights:

• The fall in vegetable prices was a key factor in the drop in CPI inflation.
• The impact of the Goods and Services Tax (GST) cut, effective September 22, will be reflected in October's data.
• September marked the fourth consecutive month with food inflation below zero.
• Rising core inflation indicates increasing demand for goods and services, but is currently driven by surging gold prices.
• Gold prices have been surging globally, crossing $4,000 per ounce.
• The RBI's Monetary Policy Committee (MPC) has cut the repo rate by 100 basis points in 2025, indicating room for further growth support.
• Economists anticipate a further reduction in the repo rate due to the expected fall in inflation in October, influenced by GST cuts.
• The RBI's medium-term inflation target of 4% has been undershot for the eighth consecutive month.

Key Concepts Involved:

• CPI (Consumer Price Index): Measures the change in consumer prices over time.
• Repo Rate: The rate at which the central bank lends money to commercial banks.
• Core Inflation: Inflation excluding volatile food and fuel prices.