Retail inflation inches up to 3.77% after fuel price hike, rupee slump

Driven by higher food and fuel prices and depreciating value of Indian rupee, retail inflation of India has jumped to 3.77 per cent in September.

This was slower than a downwardly revised 6.5 per cent year-on-year increase in July. (Image: AFP)

New Delhi: Driven by higher food and fuel prices and depreciating value of Indian rupee against the US dollar, the retail inflation of India has jumped to 3.77 per cent in September, the government data showed. Analysts polled by news agency Reuters had predicted September's annual increase in the consumer price index at 4.0 percent, compared with August's 3.69 per cent. However, the factory output measured by the index of industrial production (IIP) decelerated to a three-month low of 4.3 per cent in August due to a higher base effect. This was slower than a downwardly revised 6.5 per cent year-on-year increase in July, due to a slowdown in capital goods production, the report added further. However, the figure was better than a forecast of 4.0 percent growth in a Reuters poll of economists. The International Monetary Fund (IMF) on Tuesday stated the need of tightening of monetary policy in India to match the expectations as inflation was expected to pick up. IMF predicted the India’s growth trajectory at around 7 per cent for 2018-19. “Monetary policy should be tightened to re-anchor expectations where inflation continues to be high (as recently done in Argentina), where it is increasing further in the wake of sharp currency depreciation (Turkey), or where it is expected to pick up (India),” the IMF said in its bi-annual World Economic Outlook report earlier. Here is a graphical representation of India's retail inflation trajectory from Sep 2017 to Sep 2018: Meanwhile, India's Consumer Food Price Index (CFPI) moved up by 0.51 per cent in September compared to 0.29 per cent in August 2018 and 1.25 per cent in September 2017. The Food and beverages inflation was recorded to be at 1.08 per cent this month, while Pan, tobacco and intoxicants stood at 5.57 per cent. During September, clothing and footwear inflation was at 4.64 per cent, housing inflation at 7.07 per cent, fuel & light at 8.47 per cent. Education, personal care and effects etc witnessed inflation rate of 5.65 per cent. The Reserve Bank of India (RBI) has lowered its CPI inflation target at 4.0 per cent in Q2:2018-19, 3.9-4.5 per cent in H2 and 4.8 per cent in Q1:2019-20, with risks somewhat to the upside.