Indian consumer price inflation likely to have remained below target rate in September

Indian consumer price inflation data for the month of September is set to be released tomorrow. According to a DBS Bank research report, the CPI inflation is expected to have come below the 4 percent target for the second straight month. On a year-on-year basis, inflation is likely to have accelerated a bit to 3.8 percent from 3.7 percent, as lower food costs negate the pass-through of increased fuel and transport components.

Pulses and commonly-used vegetables dropped sequentially. Sub-inflation reaffirms the Reserve Bank of India’s decision to keep rates on hold last week, prioritising their inflation mandate, rather than getting fixating with the currency direction, noted DBS Bank.

Meanwhile industrial production growth is expected to have decelerated to 5.2 percent year-on-year in August from July’s 6.6 percent, inferring from an easing in core industries index and a pullback in manufacturing PMI index.

“Higher input prices are increasingly being reflected in PMI and wholesale price indices, as manufacturers are expected to pass-on part of the costs to preserve margins”, added DBS Bank.