September CPI inflation declines to 6.46%; vegetable inflation falls to 8.59% ::ET

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The Consumer Price Index (CPI) inflation for the month of September declined to 6.46% versus 7.73% in August. An ET Now poll predicted that CPI inflation would come in at 7.2%.

Urban inflation for the month of September dipped to 6.34% versus 7.04% in August. The food price inflation came down to 7.67% versus 9.35% in August. The vegetable price inflation fell drastically to 8.59% versus 15.15% in August. Clothing, Bedding, Footwear inflation was reported at 7.59% versus 8.5% in August.

The RBI has set a target of bringing inflation down to eight per cent by January 2015 and six per cent by January 2016 but Governor Raghuram Rajan has admitted to upside risks on the latter target.

RBI gauges both measures of inflation when deciding on monetary policy, but with risks to the January 2016 CPI target, it is unlikely to cut interest rates this year.

The RBI said it would cut the ceiling on bonds required to be held-to-maturity from 24 per cent to 22 per cent starting in January 2015, in order to increase liquidity in financial markets.