India’s retail inflation, based on the consumer price index (CPI), for September increased to 4.41 percent, from 3.74 percent recorded for the previous month, on the back of higher food prices, official data showed on Monday.
The CPI for September last year was at 5.63 percent.
Rural inflation in the month in question was higher at 5.05 percent, over the urban CPI at 3.61 percent, according to data released by the ministry of statistics.
Overall food inflation was higher in September, at 3.88 percent compared to 2.2 percent in August.
September’s rural food inflation rate was 4.05 percent as compared to 3.45 percent for urban.
Among the various categories under the general index, the inflation percentage in September was higher in “clothing and footwear” at 6 percent, and “fuel and light” at 5.42 percent. Housing was costlier by 4.74 percent.
Contributing most to food inflation in September were pulses, which were costlier by nearly 30 percent, followed by meat, fish, milk and milk products, the CPI rates for all of which were over 5 percent.
Instead, in a worsening of the crisis for millers, retail inflation in sugar fell further by 12.91 percent.
The Reserve Bank of India and the union finance ministry had in February signed a monetary policy framework agreement under which the RBI would target retail inflation for policy rates.
The target for inflation has been set at 4 percent, with a band of plus or minus 2 percentage points, from the financial year 2016-17. There is also an interim target to bring consumer inflation below 6 percent by January 2016.
Making the fourth cut in interest rates this year, the RBI cut the repo rate, at which it lends to commercial banks, by 50 basis points last month to bring it down to 6.75 percent.
However, the central bank is unlikely to ease on rates further in the near term as the CPI rebounds and there is improvement in industrial production.
Data released on Monday showed that acceleration in manufacturing and mining sectors’ output speeded up India’s factory expansion growth to 6.4 percent in August, from 4.1 percent in the month before.
Commenting on the CPI figures, Devendra Kumar Pant, chief economist, India Ratings & Research said: “September 2015 CPI at 4.41 percent was higher than Ind-Ra expectation of 3.9 percent.”
“Despite high pulses inflation, most noteworthy point in today’s inflation number is resilience of food inflation and its ability to withstand adverse weather shock (2014 and 2015 sub-par monsoon). This points that food supply management of the government is working effectively,” he added.