September CPI inflation heats up to 7.41%, surging for nine months in a row

Retail inflation, measured by Consumer Price Index (CPI), rose to a five-month high of 7.41 per cent for September, up from 7.00 per cent in August. Separately, factory output, measured through the Index of Industrial Production (IIP), witnessed a contraction of (-) 0.8 per cent in August, two separate data released by the Ministry of Statistics and Programme Implementation (MoSPI) showed on Wednesday. 

This is the ninth consecutive time that the CPI print has come above the RBI’s upper margin of 6 per cent. The government has mandated the central bank to maintain retail inflation at 4 per cent with a margin of 2 per cent on either side for a five-year period ending March 2026.

CPI data is primarily factored in by the RBI while preparing its bi-monthly monetary policy. On September 30, the Monetary Policy Committee (MPC) had hiked the Repo Rate by 50 basis points (bps) to 5.90 per cent. So far in this financial year, the MPC has raised the key interest rate by 190 bps in a bid to check the raging inflation. However, despite its move, retail inflation continues to remain above the upper tolerance level.

The Consumer Food Price Index or the inflation in the food basket showed a month-on-month rise during September to 8.60 per cent from 7.62 per cent in August. 

Prices of vegetables rose by 18.05 per cent on year in September. Apart from this, spices saw a rise of 16.88 per cent, while cereals gained 11.53 per cent and milk and products rose by 7.13 per cent. Egg prices slipped by (-) 1.79 per cent, but fruits grew by 5.68 per cent. 

The fuel and light segment rose by 10.39 per cent, clothing and footwear spiked 10.17 per cent and the housing segment inched up 4.57 per cent. 


August IIP shrinks  

Meanwhile, factory output witnessed a contraction of (-) 0.8 per cent year-on-year to 131.3 in August. 

The IIP had risen by 13 per cent in August 2021, the data showed. 

The industrial output so far in 2022-23 (April-August) had risen by 7.7 per cent compared to a spike of 29.0 per cent in the corresponding period a year ago, the data showed. 

The IIP contraction in August was mainly because of manufacturing and mining sectors. The manufacturing sector contracted by (-) 0.7 per cent to 131.0 in August, while the mining sector saw a decline of (-) 3.9 per cent to 99.6. The electricity sector was the only one that witnessed growth of 1.4 per cent to 191.3, the MoSPI data showed. 

In August last year, the manufacturing sector had witnessed a rise of 11.1 per cent. During the same month, the mining sector had surged 23.3 per cent, while the electricity sector had witnessed growth of 16.0 per cent, the data showed.

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