Inflation soars to 6.46% as onion prices continue India's tear-jerker streak, spike RBI rate cut hopes

Oct 14 2013, 17:38 IST
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Inflation, based on WPI, was at 6.1 per cent in August and 5.85 per cent in the previous month. Inflation, based on WPI, was at 6.1 per cent in August and 5.85 per cent in the previous month.
SummaryIndia inflation soars as onion prices jump a whopping 323% year on year in Sept, fruits 13%.

cooling off of prices in few weeks ahead.

A Barclays report said onion prices are reported to be softer in October, and "we continue to expect food prices to normalise somewhat in the coming months on the good monsoon and a large increase in sowing".

Commenting on the data, Ficci Secretary General A Didar Singh the food inflation has remained at high levels for an extended period and needs to be tackled by taking adequate measures from the supply and distribution side.

"Unless we do this, we face the risk of food inflation becoming a systemic problem," he said.

Assocham Secretary General D S Rawat said the skewed inflation structure would further affect the prospects of economic growth revival. He said both government and the monetary authority need to focus on boosting the growth.

"The upcoming quarterly monetary policy review must not resort to interest rate tightening, as it would further push the prices up," he added.

COMMENTARY

SURESH KUMAR RAMANATHAN, REGIONAL HEAD OF FX AND RATES STRATEGY, CIMB, KUALA LUMPUR:

"Much of the inflation that rose in September is due to squeeze in liquidity and the fact rates were raised sharply higher. It's not surprising that the first impact was seen in food prices. The rise should taper off in coming months as liquidity improves in money markets."

SHAKTI SATAPATHY, FIXED INCOME STRATEGIST, AK CAPITAL, MUMBAI

"The data is almost in line with the upward inflationary expectation owing to higher food prices in general and onion prices in particular.

"Further marginal rebound in the manufacturing inflation and core indicates some inflationary pressure in coming months. Having said that, the sub factors within the manufacturing space are well within the comfort zone.

"Though a good monsoon is expected to improve the food prices in the coming quarters, the central bank would stick to its anti-inflationary stance on October policy meeting and might observe a trending down in the inflationary forces before offering any rate-supportive growth triggers."

ARVIND CHARI, FIXED INCOME FUND MANAGER, QUANTUM ASSET MANAGEMENT, MUMBAI"

"WPI print much higher than market expectation. Manufactured products and non-food primary has also shown increase, which could be the result of the large INR depreciation between May and August finally catching through in the numbers."

"But given the rebound in INR in September, we should see some cool off in the INR-linked commodities ahead."

"Food prices still remain high, especially the volatile prices of onions which are keeping the index elevated. The impact of the good monsoons is

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