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Informist, Monday, Oct. 14, 2024

 

--India Sept CPI headline inflation rate 5.49% vs 3.65% Aug

--Informist poll estimated India Sept CPI inflation at 5.1%

--India Sept CPI inflation of 5.49% highest in 9 months

--India Sept CPI core inflation 3.5% vs 3.4% Aug

--India Sept CPI miscellaneous index up 0.4% on month

--India Sept CPI fuel and light index up 0.1% on month

--India Sept CPI clothing, footwear index up 0.2% on month

--India Sept CPI housing index unchanged from Aug

--India Sept CPI food, beverage index up 1.0% on month

--India Sept CPI oils and fats index up 2.9% on month

--India Sept CPI pulses and products index up 0.6% on month

--India Sept CPI vegetable index up 3.5% on month

--India Sept CPI cereals and products index up 0.7% on month

--India Sept CPI food price index up 1.2% on month

--India Sept CPI combined index up 0.6% on month

--India Sept CPI urban inflation 5.05% vs 3.14% Aug

--India Sept CPI rural inflation 5.87% vs 4.16% Aug

--India Sept CPI food price inflation 9.24% vs 5.66% Aug

 

NEW DELHI - India's CPI inflation rose to a nine-month high of 5.49% in September from 3.65% in August, data released Monday by the National Statistical Office showed. The rise in headline inflation was mainly on account of a statistical effect of a low base and a sequential rise in food prices.

 

At 5.49%, CPI inflation was well above expectations. According to an Informist poll, the headline inflation rate was seen at 5.1% in September after spending July and August below the Reserve Bank of India's medium-term target of 4%.

 

In September, the general index of the CPI rose 0.6% on month largely driven by a 1.2% sequential jump in the food price index.

 

Within food, the biggest month-on-month increase in prices was seen in vegetables and edible oils, with eggs and cereals not far behind. On the whole, food inflation surged to 9.24% in September from 5.66% in August.

 

"Food inflation remains a concern," noted Rajani Sinha, chief economist at CareEdge. "Vegetable inflation has reached its highest level in the past 14 months and edible oils have exited deflation for the first time in 19 months. Sequential momentum continues to be strong in certain categories, including vegetables, edible oils, pulses, and eggs. Risks to food inflation have not fully abated completely and need monitoring," Sinha added.

 

According to Madan Sabnavis, chief economist at Bank of Baroda, the kharif crop will be crucial in cooling the prices of cereals and pulses. "In case of horticulture products, price pressures will persist as can be seen for vegetables in October where prices have risen sharply," Sabnavis added.

 

Meanwhile, core inflation edged up marginally to 3.5% in September from 3.4% in August. At 3.5%, core CPI inflation is at its highest since January.

 

The September retail inflation data comes a few hours after the commerce ministry released wholesale price data, which showed WPI inflation increased to 1.84% last month--slightly lower than economists' expectations of 2.0%--from August's four-month low of 1.31%. Like CPI inflation, WPI inflation increased in September due to an unfavourable base effect.

 

The latest CPI inflation print takes the average for Jul-Sept to 4.2%, above the RBI's revised forecast of 4.1%. Last week, the Indian central bank's Monetary Policy Committee left the repo rate unchanged at 6.50% for the 10th meeting in a row. However, it voted unanimously to change the stance of policy to neutral from withdrawal of accommodation, building hopes of a first rate cut in four-and-a-half years at the committee's December meeting. On Friday, Informist had reported that as many as 20 of 25 economists polled by it said they expect the MPC to lower the repo rate at the Dec. 4-6 meeting from 6.50%. The other five economists saw the first rate cut being announced in February.

 

However, signs are emerging that the sharply higher-than-expected CPI print for September is pushing economists to postpone their rate cut calls.

 

"The substantial rebound in the CPI inflation print for September has appreciably dampened the possibility of the stance change in the October policy being followed up by a rate cut in the December meeting," Aditi Nayar, ICRA's chief economist, said. "For a rate cut to be forthcoming in the December policy review, either the CPI inflation will need to flatten considerably below 5.0% in the next print or the GDP growth for Jul-Sept will need to significantly undershoot the MPC's expectations," Nayar added.

 

Kunal Kundu, Societe Generale's India economist, also noted that with inflation in Jul-Sept exceeding the RBI's forecast, "probability of a December rate cut has reduced given the central bank's unwavering focus on food price led headline inflation, unless the October inflation data surprises majorly on the downside".

 

As per the RBI's latest forecasts, headline retail inflation is seen rising to 4.8% in Oct-Dec before cooling down to 4.2% in Jan-Mar. For 2025-26 (Apr-Mar), CPI inflation is forecast at 4.1%--the lowest since FY19.

 

The following table details sequential and annual increase in the main components in CPI (Combined):

 

	Weight	Index for September	Month-on-month change (in %)	Year-on-year change (in %)
				September	August
Cereals and products	9.67	193.8	0.7	6.84	7.31
Meat and fish	3.61	223.5	0.1	2.66	4.30
Egg	0.43	192.1	1.6	6.31	7.08
Milk and products	6.61	187.0	0.3	3.03	2.92
Oils and fats	3.56	166.2	2.9	2.47	(-)0.86
Vegetables	6.04	269.8	3.5	35.99	10.75
Pulses and products	2.38	216.0	0.6	9.81	13.60
Sugar and confectionery	1.36	131.6	0.2	3.46	4.70
Spices	2.50	228.0	0.0	(-)6.13	(-)4.36
Food and beverages	45.86	204.8	1.0	8.36	5.30
Pan, tobacco and intoxicants	2.38	208.6	0.0	2.51	2.71
Clothing and footwear	6.53	193.2	0.2	2.71	2.72
Housing	10.07	181.1	0.0	2.78	2.66
Fuel and light	6.84	176.8	0.1	(-)1.39	(-)5.25
Miscellaneous	28.32	185.0	0.4	4.05	3.89
General Index	100	194.2	0.6	5.49	3.65
Consumer Food Price Index	39.06	205.8	1.2	9.24	5.66

 

End

 

Reported by Siddharth Upasani and Shubham Rana

Edited by Ashish Shirke

 

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