Softening food prices help inflation cool to 2.6 per cent in September


India's annual rate of inflation, based on monthly wholesale price index (WPI), declined to 2.60 per cent for the month of September 2017 over same month of past year.

"Index of "Food Articles" group declined by 4% for the previous month due to lower price of fruits and vegetables (15%), betel leaves (6%), ragi (4%), bajra (3%), maize and tea (2% each) and poultry chicken (1%)", it added.

The index for "Manufacture of Wearing Apparel" sub-group rose by 0.1 per cent to 136.6 in September 2017 from 136.5 for the previous month due to higher price of trouser/pants made of cotton and/or mad-made fibre (2 per cent).

Within this, inflation in the food articles segment slowed drastically to 2.04% from 5.75% over the same period. "The correction in vegetable prices was the chief driver of the decline in primary food inflation to 2 per cent from 5.8 per cent", said Aditi Nayar, principal economist, at Icra.

Fuel and power inflation stood at 9.01 percent, compared to 9.99 percent.

The crude oil and natural gas segment in the primary articles category saw prices contracting 11.5% in September and August, compared with a contraction of 10.8% in July.

Onion prices, however, continued to rule high with 79.78 per cent increase in September.

Earlier this month, the Reserve Bank of India (RBI) had kept benchmark interest rate unchanged on fears of rising inflation. Inflation in manufacturing accelerated to 2.72% in September from 2.45% in the month of August. "WPI inflation corrected sharply in September, led by food articles and fuel and power, even as higher metal prices drove up core inflation to a 35 month high".

Retail inflation for September as indicated by the consumer price index (CPI), which has a different composition of commodities, however remained unchanged in September at 3.28%, from its revised figure for August, according to the data released by the Central Statistics Office (CSO) on 12 October. "Overall, inflation remains within RBI's indicative trajectory and this is an encouraging sign".



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