Inflation: Food prices rise 9.5% year-on-year in September
What's the story
India's Wholesale Price Index (WPI) based inflation has risen to 1.84% in September. The actual rise is a tad lower than the 1.92% predicted by economists, but is an uptick from August's 1.31%. The data also showed a massive year-on-year (YoY) spike in food prices. In September, food costs increased by 9.5% as opposed to a mere 3.26% rise in August.
Surge
Vegetable costs triggered spike
This spike in food prices was primarily led by vegetable costs, which witnessed a whopping 48.7% YoY rise as opposed to a 10% decline in the previous month. Cereal prices also contributed to the trend with an 8.1% YoY increase.
Market trends
Manufactured goods and fuel prices show contrasting trends
Unlike the food sector, prices of manufactured goods witnessed a slight decline in growth, rising just 1% as opposed to 1.2% in August. Fuel and power prices also followed suit, falling 4% from a mere 0.7% fall last month. These contrasting trends underline the differing effects of inflation across various sectors of the Indian economy.
Monetary policy
RBI maintains interest rates amid signs of economic slowdown
In light of early signs of an economic slowdown, the Reserve Bank of India (RBI) has kept its key interest rates unchanged. However, it has changed its stance to "neutral," possibly opening the doors for rate cuts in the future. The move comes as global oil prices remain close to $80 per barrel amid rising tensions in the Middle East, a factor that could further stoke inflation in India.