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India: Consumer price inflation slows further in September and wholesale price inflation falls to lowest level in five years

October 14, 2014

In September, consumer prices were unchanged over the previous month. The reading came in below the 0.91% increase registered in August. September’s subdued reading marked the lowest in seven months. Annual inflation fell from 7.7% in August to 6.5% in September, which undershot the 7.1% rise the market had expected and marked the lowest level since the series began in January 2011.

The wholesale price index (WPI) fell 0.38% in September over the previous month. The reading contrasted an increase of the same magnitude in August and represented the sharpest monthly decrease in nine months. The monthly decrease was mainly affected by lower prices for food, particularly fresh food, as well as for fuel and textile products.

Wholesale prices rose 2.4% in September over the same month last year (August: +3.7% year-on-year), which marked the lowest print in nearly five years. As a result, annual average WPI inflation fell from 5.9% in August to 5.5% in September.

Despite the moderation in wholesale price inflation, most analysts caution that poor monsoon rains could affect future crops and push agricultural prices up in the coming months. In addition, geopolitical tensions in Ukraine and Russia, as well as in the Middle East, could push energy prices up, thus threatening the inflation outlook. The Reserve Bank of India has recently signaled that it will hold off cutting interest rates until it sees that CPI inflation fall to its 6.0% target in January 2016.

FocusEconomics Consensus Forecast panelists expect wholesale price inflation to average 5.4% in FY 2014/2015, which is unchanged from last month’s forecast. In FY 2015/2016, the panel expects wholesale price inflation to average 6.0%.


Author:, Senior Economist

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India Inflation September 2014 0

Note: Annual and monthly variation of wholesale price index (WPI) and annual variation of consumer price index (CPI) in %.
Source: Ministry of Commerce and Industry and FocusEconomics calculations.


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