September retail inflation comes down to 6.46%

Indi­a’s annu­al con­sumer price infla­tion eased for a sec­ond straight month in Sep­tem­ber to 6.46 per­cent, its low­est lev­el since the gov­ern­ment start­ed releas­ing the data in 2012. With core infla­tion com­ing off incre­men­tal­ly, RBI’s com­ments on con­trol­ling infla­tion may get more con­fi­dent. This does­n’t mate­ri­al­ly change the prob­a­bil­i­ty of any rate cut in the near term. Mar­kets were poised for a sub‑7 per­cent num­ber, and this num­ber will add to the pos­i­tive sentiment.

The data is very favourable. The only ques­tion is about its sus­tain­abil­i­ty because we know there are pri­mar­i­ly two rea­sons for this kind of mod­er­a­tion. One, of course, is the sta­tis­ti­cal base effect. And sec­ond, there was a month-on-month sig­nif­i­cant decline in veg­etable prices. But RBI has said they will wait for infla­tion to come down durably. So just going by one obser­va­tion, they can­not take the final call. They will wait and see how data pans out post-Novem­ber when base effect will wane.