Published: Wed, October 18, 2017
Economy | By Melissa Porter

Wholesale inflation cools in Sept

Core inflation (manufactured products excluding foods products) increased to 35-months high of 2.8% in September 2017 from 2.6% in August 2017.

According to the official data, wholesale inflation fell to 2.60% in September as prices of food articles, led by vegetables, softened. "A favourable base effect aided the moderation in inflation for fuel and power, despite the recent rise in prices of petrol, diesel, jet fuel and other fuels", said Aditi Nayar, principal economist at ratings agency ICRA.

On Thursday, data released by the government showed that retail inflation remained flat at 3.28 percent in September, as food prices remained steady, while fuel and housing prices witnessing modest growth during the month. It was 1.36 per cent in September 2016. Onion prices, however, continued to rule high with 79.78 per cent increase in September. At 2.6 per cent, it was almost 60 basis points (bps) lower than the 3.2 per cent recorded in August. Pulses continued to witness deflation at 24.26 per cent, likewise in potato at 46.52 per cent and wheat at 1.71 per cent.

Earlier in the month, the central bank's Monetary Policy Committee (MPC) forecast that retail inflation will hover around 4.2-4.6 percent between October-March this year, higher than the previous projection of 4-4.5 percent.

On the flip side, inflation marginally narrowed in the fuel and power segment from 9.99 percent in August to 9.01 in September, the Union Ministry of Commerce and Industry data showed.

And inflation in vegetable prices cooled to 15.48 percent in September as against a high of 44.91 percent last month. It also raised its inflation forecast to a range of 4.2 to 4.6 percent during the remainder of current fiscal as against 4 to 4.5 percent previously. This gives a hope that prices of vegetables will go down.

Continued strength in import growth is a reflection of healthy underlying demand trend and an indication that growth recovery is expected to have taken hold in the September quarter, says a Morgan Stanley report.

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