India’s inflation slowed to a three-month low in September, returning to within the Reserve Bank of India’s target band, as food prices continued to ease.
(Bloomberg) — India’s inflation slowed to a three-month low in September, returning to within the Reserve Bank of India’s target band, as food prices continued to ease.
The consumer price index rose 5.02% from a year earlier, statistics ministry data showed Thursday. That was lower than 6.83% in August and compared with a median forecast of 5.4% in a Bloomberg survey of economists.
The figures give the central bank some reprieve after it struck a relatively hawkish stance last week when it kept its key interest rate unchanged for a fourth straight meeting. Governor Shaktikanta Das emphasized at the time that the RBI was targeting the midpoint of the 2%-6% inflation range, signaling monetary policy would remain relatively tight for some time.
Food prices, which make up about half of the inflation basket, rose 6.56% compared with 9.94% in August. Fuel and electricity costs fell 0.11% while housing prices accelerated 3.95%. Core inflation, which strips out volatile food and energy prices, moderated to 4.57%.
“The softness has been broad based across perishables and core inflation,” said Upasna Bhardwaj, an economist at Kotak Mahindra Bank. “However, higher crude oil prices and persistence of price pressures on cereals and pulses remains to be watched for.”
Inflation is a worry for Prime Minister Narendra Modi’s Bharatiya Janata Party, which faces crucial state polls next month and national elections in summer of 2024.
India imported tomatoes and imposed curbs on exports of rice, wheat and sugar to tame food prices ahead of the festive season that will peak in November. Authorities also slashed cooking gas prices to soften the impact of rising inflation on households.
Higher international crude prices remain a key threat to India, the world’s third-largest consumer of oil, most of which it imports.
Official data also showed factory output rose to a 14-month high of 10.3% in August from a year ago, accelerating from the prior month’s revised reading of 6.0%.
(Updates with size and scope in the first paragraph.)
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