India's wholesale price inflation falls to five-year low in September

NEW DELHI – India’s benchmark inflation rate fell to a five year low of 2.4 per cent in September as food and vegetable prices dropped, the Commerce Ministry said Tuesday.

Wholesale price inflation was 3.7 per cent in August and 7.1 per cent in September last year.

India has suffered chronically high inflation. But the lower level of price increases, if sustained, could pave the way for the central bank to cut interest rates next year to boost economic growth.

The Commerce Ministry data released on Tuesday said the index for the food articles group declined by 1.4 per cent due to lower prices for tea, fruits and vegetables, maize, poultry chicken and fish.

India’s recently established retail inflation index rose 6.5 per cent in September, its slowest increase on record.

HSBC said in a report that the sharp deceleration in food inflation even with a weak start to monsoons this year showed that Indian government’s efforts, which included close monitoring of wholesale markets and supplementing local supply with imports, had helped contain price pressures.

“Apart from food, softer commodity prices and stable exchange rates have dampened fuel inflation. In addition, tight monetary and fiscal policy conditions have also contributed to the disinflation,” the statement said.