New Delhi, November 13 (IANS). Economists said on Thursday that due to the decline in inflation rate in October, the central bank may once again cut interest rates in the Monetary Policy Committee (MPC) in December.
Retail inflation has reached a record low of 0.25 percent in October, which was 1.44 percent in September. This is the lowest inflation rate ever recorded in the current CPI series.
The reason for the decline in overall inflation is the decline in core inflation along with food inflation.
CRISIL said in its note that due to the decline in food inflation rate more than expected, the supply of food products remaining strong in the remaining year, low global crude oil prices and the benefits of GST reaching the common people, we estimate that the retail inflation rate may remain on average at 2.5 percent this financial year, which is less than last year’s figure of 4.6 percent.
It was further said in the note that in many big categories the effect of GST has not been completely transferred in October, the effect of which we will see in the coming time in November. Retail inflation currently stands at 0.9 percent in November, which may decline further due to the impact of GST. Core inflation in FY26 is now estimated to be less than 2 per cent, which directly means a further decline of 50 basis points from the RBI’s estimate of 2.6 per cent.
According to ICRA Chief Economist Aditi Nair, the RBI’s Monetary Policy Committee (MPC) is likely to further reduce its retail inflation forecast for FY2026 by 2.6 per cent, given the impact of GST rate rationalization on several items in the CPI basket along with a soft sequential movement in food prices.
He further said that this has paved the way for further reduction in interest rates in the December monetary policy.
–IANS
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