Sept CPI inflation up at 4.41%, snaps 2-month falling trend

Biggest jump in prices in pulses and related products, spices, and meat and fish

Consumer price index-based inflation for the month of September reversed a two-month easing streak and rose 4.41 per cent year-over-year, due to higher food retail prices.

Retail inflation for August was 3.74 per cent and for July was 3.69 per cent, an eight-month low. CPI food inflation for September rose nearly four per cent over a year before, on the back of poor rainfall, compared with 2.2 per cent in August.

Monsoon season rain has been 14 per cent less than normal, with a drought-like situation in parts of Maharashtra, Karnataka and Bihar.

The biggest jump in prices compared with September 2014 was in pulses and related products, spices, and meat and fish, which went up nearly 30 per cent, nine per cent, and 5.6 per cent, respectively. The item head of paan, tobacco and intoxicants rose nine per cent, fuel and lighting rose 5.4 per cent, and clothing items rose nearly six per cent.

The September data comes soon after the Reserve Bank of India cut its key policy rate by 50 basis points, the biggest of four reductions it made in this year, to boost economic activity.



Wholesale price inflation has been in negative territory for the calendar year so far. For August, WPI inflation was minus 4.95 per cent. The September WPI data is expected later this week.

Last week, RBI chief Raghuram Rajan had predicted that retail prices would see a rise in the September-December quarter but reiterated that he did not expect CPI inflation to rise above sixper cent in January, the short-term target in the Monetary Policy Framework Agreement with the government.

Rajan had said sub-six per cent CPI inflation was one of the ‘green shoots’ in the economy, the others including greater public investment in road infrastructure and a pick-up in consumption. “But, the key missing factor in stronger and sustainable growth is private investment and this has not picked up,” he had noted.