Food items became expensive, wholesale inflation index reached 1.84 percent

Due to the continuous rise in food prices in India, the country's wholesale inflation increased to 1.84 percent on an annual basis in September, while it was 1.31 percent in August. WPI for September-2023 was estimated at 0.26 percent. Wholesale inflation, measured using the Wholesale Price Index, was expected to be 1.92%.

What does the report say?

Food prices, a key index, rose 3.26 percent to 9.47 percent in August from September, government data showed. Apart from this, the annual rate of WPI increased to 6.59 percent as compared to 2.42 percent in August. Inflation in manufactured goods increased from 1.22 percent to 1 percent in August. fuel and electricity (13.2 percent); and manufactured products (64.2 percent).

RBI's stance During the recent rate-setting panel meeting, the MPC kept its inflation forecast for this financial year (FY25) unchanged at 4.5 per cent, even considering the food price movement and geopolitical tensions. Can cause harm, which can have any effect. Danger of softening of crude oil prices.

What is the bank's estimate?

The country's central bank now sees inflation at 4.1%, 4.8% and 4.2% for the second, third and fourth quarters of this financial year respectively. In the August policy, the monetary authority had estimated inflation to be 4.4%, 4.7% and 4.3% respectively. Inflation in the first quarter was 4.9%. Inflation for the first quarter of the next financial year is estimated at 4.3%. A central bank study published in August showed that India's food inflation averaged 6.3% between June-2020 and June-2024, up from 2.9% over the previous four years.

For this reason no change has been made in the repo rate.

It declined slightly in July and August due to statistical base effects, but is expected to pick up again last month. On Wednesday, the Monetary Policy Committee (MPC) headed by the Reserve Bank of India kept the repo rate unchanged. Given the balanced inflation and growth trend, Shaktikanta Das announced bringing back the accommodative stance of the MPC to neutral. This change gives the MPC more flexibility to focus on keeping inflation in line with the target without compromising growth.