India Inflation Accelerates As Expected; Production Growth Tops Forecast

(RTTNews) - India's consumer price inflation accelerated in September after slowing in the previous two months, and industrial production growth in August exceeded expectations, provisional data from the Central Statistics Office showed Monday.

The consumer price index rose 4.41 percent year-on-year following 3.74 percent in August, which was revised from 3.66 percent. Economists had expected an inflation figure of 4.40 percent.

Food price inflation climbed to 3.88 percent from 2.20 percent.

The Reserve Bank of India had expected inflation to be around 4.5 percent in September.

After cutting interest rates by a bigger-than-expected 50 basis points in September, the central bank said the ebbing of inflation thus far this year was due to lower month-on-month increases in prices and favorable base effects.

Looking forward, the bank forecast inflation to rise from September for a few months as favorable base effects reverse. The RBI expects inflation to reach 5.8 percent in January 2016. The focus must shift to bringing inflation to around 5 percent by the end of fiscal 2016-17, the bank said.

Separate data from the statistical office showed on Monday that industrial production grew 6.4 percent year-on-year during August, following a revised 4.1 percent gain in July. That was much bigger than the 4.8 percent increase economists had predicted.

Manufacturing output grew 6.9 percent and mining production rose 3.8 percent. Electricity output climbed 5.6 percent.

The latest purchasing managers' survey showed that India's manufacturing sector expanded at the slowest pace in seven months in September amid weaker gains in new business and job cuts. The survey also revealed that reflecting falling commodity prices, input costs decreased on average, and firms subsequently lowered their charges.

Last week, the International Monetary Fund trimmed India's growth forecast for this year to 7.3 percent from 7.5 percent, while the projection for next year was retained at 7.5 percent.