September WPI inflation dips to 5-year low of 2.38% - Economic Times

NEW DELHI: Wholesale Price Index (WPI) inflation for the month of September dipped to a 5-year low of 2.38% versus 3.74% in August. An ET Now Poll had predicted that WPI would be reported at 3.1%. Inflation data for the month of July was revised to 5.41% versus 5.19% earlier.

The Food Price Index for September dipped substantially to 3.52% versus 5.15% in August. The fuel & power inflation also came down to 1.33% versus 4.54% in August. The primary articles inflation came in at 2.18% versus 3.89% in August.

Wholesale inflation in onion contracted to 58.12 per cent in September as compared to a contraction of 44.7 per cent in the previous month.

While inflation in vegetable basket as a whole shrunk to 14.98 per cent in September, rate of price rise in potato was 90.23 per cent from 61.61 per cent in the previous month.

The data further revealed that inflation in milk, eggs, meat and fish continued to decline in September as well. However, there was slight increase in the prices of fruits during the period.

Inflation in manufactured products, like sugar, edible oils, beverages and cement, fell to 2.84 per cent in September as against 3.45 per cent in the previous month.

Meanwhile, retail inflation fell sharply in September from the previous month, dropping to its lowest since the government launched the consumer price index (CPI) in 2012 and making a strong case for the Reserve Bank of India governor Raghuram Rajan to slash interest rates after industrial growth disappointed for the second successive month in August.

Consumer inflation fell to 6.46 per cent in September compared to the year-ago period, from 7.8 per cent in August, due to the sharp decline in vegetables inflation and the base effect of high inflation last year, data released by the statistics ministry on Monday showed.

Retail inflation in vegetables eased to 8.59 per cent in September from 15.1 per cent in the previous month. "In case the inflation numbers remain low in October as well, it could trigger RBI to cut rates in the next policy meet," said Madan Sabnavis, chief economist, CARE Ratings. RBI has maintained a status quo on the repo rate after the 25 basis points hike in January. It has set a target of bringing inflation down to 8 per cent by January 2015 and 6 per cent by January 2016. It will be under greater pressure to cut rates after industrial growth rose just 0.4 per cent in July and August and inflation is likely to ease further due to lower fuel prices and high base effect of last year.

Core inflation, a measure of inflation that removes volatile food and fuel elements and is followed closely by central bankers for signs of demand pressures, eased further in August, ticking one more box in support of a rate cut. Core CPI was down to its lowest ever to 5.9 per cent in September against 6.9 per cent in the previous month.

(With inputs from PTI)

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