India's wholesale price index increased by 5.13 percent on the year in September, picking up from 4.53 percent in August and just below the consensus forecast of 4.7 percent. The index advanced 0.67 percent on the month after an increase of 0.25 percent previously. Today's data follows the release last week of CPI data showing an increase in consumer inflation from 3.69 percent in August to 3.77 percent, below the mid-point of the Reserve Bank of India's target range of 2.0 percent to 6.0 percent.
The increase in WPI inflation in September largely reflects a smaller year-on-year decline in food prices, which account for around 15 percent of the index. These fell 0.21 percent on the year after falling 4.04 percent in August, with vegetable prices falling by 3.83 percent after a decline of 20.18 percent previously. Price gains were moderately weaker in other major categories. The year-on-year increase in fuel and power prices (around 13 percent of the index) fell from 17.73 in August to 16.65 percent in September, while inflation for manufactured products (around 64 percent of the total index) eased from 4.43 percent to 4.22 percent.
At their latest policy review, held earlier in the month, the RBI's Monetary Policy Committee left policy rates on hold after increasing them by 25 basis points at their last two meetings in August and June. Although headline CPI inflation is below the RBI's 4.0 percent target for now, officials stress that there is a need to remain vigilant about the inflation outlook, suggesting they are prepared to deliver further rate hikes if inflation picks up again in coming months.