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

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India's wholesale price inflation eased unexpectedly in September, after accelerating in the previous two months, data from the Ministry of Commerce & Industry showed Monday. Inflation in the fuel and power segment slowed to 9.01% in September from 9.99% in August.

On a segment-wise basis, expenses on primary articles, which constitute 22.62% of the WPI's total weightage, declined during the month in consideration by 3%, from an increase of 2.26% in August.

India's wholesale inflation grew at 2.6 percent during September, lower from 3.24 percent in August, led by a major fall in the inflation rate of food, besides fuel products.

The index for manufactured products (weight 64.23 per cent) for September 2017 rose by 0.4 per cent to 113.4 from 112.9 for the previous month. The eggs, meat and fish category saw a price rise of 5.47 per cent.

The government data released today showed that food articles inflation tapered to 2.04 per cent in September against 5.75 per cent in August on an yearly basis.

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Inflation in manufactured products witnessed a slight increase of 2.72 per cent against 2.45 per cent in August. However, the price of manufacture of knitted and crocheted apparel declined by 1 per cent. On the other hand, the index for fuel and power (weight 13.15 per cent) rose by 1.7 per cent to 90.7 from 89.2 for the previous month due to higher price of LPG, naphtha, ATF, petrol, kerosene, HSD, furnace oil, and bitumen. The wholesale inflation rate was at 1.36% during September 2016.

Prices of some vegetables, such as tomatoes, which had risen sharply in July, corrected in September.

"In the recently announced monetary policy review, the opportunity was lost as far moderation of interest rate is concerned, however, given the moderation in both CPI and WPI inflation, the RBI should resume the rate easing cycle in its next monetary policy announcement to give a fillip to demand, " Chandrajit Banerjee, Director General of CII said.

"Even the retail inflation numbers released earlier showed some softening in case of food prices".