Urban Food Index-Softening Grocery Costs, Steady Rate Outlook
Our national 10‑item basket eased to ₹977 (‑0.7% w/w) as the post‑monsoon harvest cycle restores steady arrivals; at the same time volatility ticked higher even as household affordability remained high. Strong supply buffers — healthy Kharif output, robust market inflows, near‑full reservoirs and softer global energy costs are the concrete forces behind this moderation, creating measurable downward pressure on retail food inflation. Compared with our previous note, the latest print reinforces a stabilisation narrative: the relief is broad‑based across perishables, pulses and proteins rather than concentrated in a few cities.
For inflation and the RBI, current readings bolster the near‑term case for a policy pause while preserving optionality for a calibrated easing early next year if disinflation persists; imported cost risks — a mildly softer rupee, shifting edible‑oil and crude trade flows, and large bullion imports — remain credible tail risks that could delay or temper any easing.