IIFL reports: WPI Inflation: Core inflation remains stable

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Economics (WPI Inflation: Core inflation remains stable):

- India’s WPI inflation accelerated modestly to 8.6% YoY in September from 8.5% in August. This was slightly above our expectation of flat YoY inflation in September.

- Sequentially, WPI index rose 0.6% MoM in September after being flat in the previous month, as primary product prices rose sharply by 1.5% and manufactured products’ prices rose by 0.3%, offset modestly by a 0.3% decline in energy prides.

- However, core inflation remains contained. WPI ex food and energy, though up 0.5% MoM, is up just 0.4% over the last three months (<2% annualised). Manufacturing WPI ex food products (RBI’s preferred measure of core inflation) rose just 0.2% MoM in September, but has been flat over the last three months.