This possibly shows that the positive effects of a good monsoon have started to flow through the economy. Further, prices of pulses have also declined leading to a sharp fall in inflation essentially responding to some policy action. That said, core inflation seems to have moved up slightly but is unlikely to be cause of concern in the near future. Overall, the trajectory of inflation is in line with expectations of decline and have increased the chances of the RBI meeting its target of 5% inflation by March 2017.
The author is Rishi Shah, Economist, Deloitte India.