Adding to the headache of the policy makers, the provisional annual inflation rate based on all India general Consumer Price Index (CPI) (Combined) for September 2013 on point to point basis (September 2013 over September 2012) came higher at 9.84%, as compared to 9.52% (final) for the previous month of August 2013. The corresponding provisional inflation rates for rural and urban areas for September 2013 stood at 9.71% and 9.93% respectively, compared to 8.93% and 10.32% respectively in August.
These figures add to set of dismal figures, earlier, in the day, the annual rate of inflation, based on monthly WPI, stood at seven month high of 6.46% (provisional) for the month of September, 2013 (over September , 2012) as compared to 6.10% (provisional) for the previous month and 8.07% during the corresponding month of the previous year. The WPI data came on the heels of ugly factory output data, which grew by merely 0.6% in August, confirming that the economy still has some distance to cover before settling in a stable recovery phase.
Thus, the latest data adds to the odds of, Reserve Bank of India yet again hiking interest rates in the upcoming quarterly policy review on October 29, in order to do away with sticky inflation. Reserve Bank of India’s new governor, Raghuram Rajan, following the footsteps of his predecessor, Duvvuri Subbarao, reiterated the commitment of bringing down inflation to more tolerable level, by hiking the policy Repo Rate under the Liquidity Adjustment Facility (LAF) by 25 basis points from 7.25% to 7.50% with immediate effect in his maiden Mid-Quarter Monetary Policy Review: September 2013.
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