INSUBCONTINENT EXCLUSIVE:
Consumer inflation stood at 3.77 per cent in September, as against 3.69 per cent in the previous month, the government said on Friday
the Reserve Bank of India's (RBI) medium-term target of 4 per cent.The Reserve Bank of India (RBI) primarily tracks consumer inflation
data while formulating the monetary policy
The central bank had last week maintained a status quo on key lending rates, surprising many market watchers who had anticipated a third
consecutive hike, but ruled out any reduction going forward.Consumer inflation had stood at a 10-month low of 3.69 per cent in August
That was the first in 10 months in which retail inflation came below the RBI's medium-term target, triggering hopes of a rate hike in the
October policy.Thursday's data refueled hopes of a reduction in key lending rates by the central bank."The rise in crude oil prices, the
sharp weakening of the rupee, and the revision in MSPs (minimum support prices) are likely to push up the headline inflation above 4 per
cent in the ongoing quarter
These risks, combined with the change in stanceto calibrated tightening suggest a likely rate hike in the December 2018 policy review," said
Aditi Nayar, principal economist at credit ratings agency ICRA.Food inflation quickened to 0.51 per cent, as against 0.29 per cent in August
Food prices make up nearly half of the Consumer Price Index."The story on food has been very much comfortable this year
So much so that it could help mitigate a lot of pain because of the rise in crude prices and a falling rupeeAmid mixed set of indicators, we
would keep a close watch on inflation expectations to second-guess the next move on rates from the RBI," said Tushar Arora, senior
economist, HDFC Bank.The central bank is due to conduct its next policy review in December.Separate data on Friday showed factory activity
growth - determined by the Index of Industrial Production (IIP) - stood at 4.3 per cent in August, slowing down from 6.6 per cent in the
previous month.(With agency inputs)
