India's retail inflation slumped to a nearly three-year low in September, reinforcing the argument for lowering interest rates, although the central bank may prefer a status quo for a few more months.
Consumer inflation tumbled to 6.46% in September, down from August's revised 7.73% and far better than a consensus market forecast of 7.1%.
The inflation fall was helped by bountiful rains in the final stages of a patchy monsoon that lowered food prices.
The fall in global crude oil prices to below $90 a barrel will likely lead to price cuts in diesel and petrol, but patchy monsoon this summer could keep vegetable and food prices high.
But a status quo on interest rates would imply your EMIs are unlikely to fall anytime soon even as high prices, despite recent moderation in inflation rates, continue to eat away large chunks of household incomes.
Ahead of the festival season, high loan rates could influence people's decision to buy houses, cars and other consumer goods that are mostly bought through loans.
The more than one percentage point drop in retail inflation rates over August's figures should bring cheer to the National Democratic Alliance (NDA) government that rode to a landslide election victory promising to bring down prices of essentials as part of its poll pledge to usher in "achche din (good days)".
It was also the lowest since January 2012, the month since the government launched a new price series with revised weights to various basket of goods.
The time to open the bubbly, however, may be still some months away as part of the fall in retail inflation, is also because of a high base effect - a statistical phenomenon that magnifies small changes, although the real fall may not be very large.
Last month, Reserve Bank of India (RBI) governor Raghuram Rajan kept lending rates unchanged, withstanding mounting pressure from industry leaders and belying the government's hopes that he would lower borrowing costs to aid an incipient economic recovery.
"The RBI will find some comfort in these numbers," said global consultancy Deloitte India senior director Anis Chakravarty. But "it's important to see whether this trend continues", he added.
Rajan's aggressive policies to curb price rises appeared to be paying dividends, AFP reported, quoting economists.
"One shouldn't read too much into one set (of numbers) but it's looking increasingly likely the bank will meet its inflation targets," the agency quoted Capital Markets chief Asia economist Mark Williams as saying.
"As a result, the RBI could start loosening monetary policy earlier than expected, especially with industry essentially still on its back," Williams added.
Rajan, who has declared he wants to "break the back of inflation", a persistent problem in India, has set a goal of wrestling down consumer inflation to six percent by January 2016.
Meanwhile, there are predictions that petrol and diesel prices could come down further as early this week, aided by plunging crude oil prices that touched $88 a barrel for the Indian crude basket.
India imports two-thirds of its energy need, making oil prices a key factor for inflation.
Lower oil prices will also help the Narendra Modi-led Bharatiya Janata Party (BJP) government deliver quickly on its electoral promises to cool inflation and revive the economy.
The inflation reading was the lowest figure since the government introduced the current consumer price index in January 2012.
But economists also cautioned the September figure was flattered by last year's high inflation and that statistical effect could wear off toward year-end, pushing inflation higher again.
India's economy has posted two years of sub-five-per cent growth, the longest slowdown in a quarter century.
But foreign investors have poured money into Indian stocks in hopes the new right-wing government's moves to clear infrastructure projects and create a more favourable business climate will lift growth and help India emulate China's economic ascent.
The data for inflation based on Wholesale Price Index (WPI) will be released on Tuesday.
(with AFP and PTI inputs)