India: Inflation remains stable
November 15, 2010
In September, the consumer price index for industrial workers (CPI-IW) added 0.56% over the previous month, which was above the flat reading tallied in August. Owing to the subdued relatively monthly price increase, annual consumer price inflation inched down to 9.8% (August: 9.9%). Meanwhile, the more recent and comprehensive wholesale price index (WPI) showed price pressures persisted, which points towards further monetary tightening in the coming months. In October, the WPI added 0.43% over the previous month, which came above September's 0.28% price increase and overshot market expectations, which had wholesale prices growing at the same rhythm as in September. Nonetheless, annual wholesale inflation remained unchanged at 8.6%. The monthly wholesale price increase was mostly driven by higher prices for non-food primary articles (+2.7% month-on-month), which include raw materials such as jute, silk, cotton and rubber. On a positive note, food price inflation eased somewhat, slowing from a monthly 1.3% spike in September to a 0.6% increase in October. Meanwhile, annual average wholesale price inflation increased for the tenth consecutive month, rising from 8.2% in September to 8.6% in October. Moreover, annual average inflation is expected to increase in the coming months, as last year's unusually low inflation figures are moving out of the equation, before moderating again in the final months of the current fiscal year, which ends in March 2011.