<p>Driven by higher food prices, India’s retail inflation in September inched close to 4%, the upper limit of the Reserve Bank of India’s (RBI) target. Beyond this limit, it would be difficult for the central bank to cut interest rates, a stimulus that it has been providing since the beginning of the year to boost a slowing economy.</p>.<p>The consumer price inflation rose to 3.99% last month after the rate of price rise in food items went up to 5.11% from nearly 3% in August. Close to half of the retail price inflation basket consists of food prices.</p>.<p>Inflation in vegetable prices was more than 15% in September, a period when onion and tomato prices shot up due to supply disruptions.</p>.<p>Experts said if vegetable prices remained high in the coming weeks, the year 2019-20 could end up with inflation as high as 4%.</p>.<p>Inflation in pulses, meat and fish too increased, posing problems to policy makers making efforts to enhance consumer demand in a slowing economy.</p>.<p>The RBI, which has handed over five policy rate cuts of 135 basis points since February to give a leg-up to economic growth on the back of subdued inflation, may find it difficult to keep up with its rate-cut cycle.</p>.<p>The wholesale price inflation, however, eased to 0.33% in September as against 1.08% in August. One reason for lower inflation print in WPI could be that it has a lower weight for food products while CPI has a higher weight of food category at 46%.</p>.<p>Besides, WPI inflation reflects changes in producer prices, while CPI measures variations in prices of a basket of consumer goods and services.</p>.<p>The RBI tracks Consumer Price Index inflation as the main metric to decide its monetary policy.</p>.<p>Other than that, it also tracks industrial production numbers that has contracted in August.</p>
<p>Driven by higher food prices, India’s retail inflation in September inched close to 4%, the upper limit of the Reserve Bank of India’s (RBI) target. Beyond this limit, it would be difficult for the central bank to cut interest rates, a stimulus that it has been providing since the beginning of the year to boost a slowing economy.</p>.<p>The consumer price inflation rose to 3.99% last month after the rate of price rise in food items went up to 5.11% from nearly 3% in August. Close to half of the retail price inflation basket consists of food prices.</p>.<p>Inflation in vegetable prices was more than 15% in September, a period when onion and tomato prices shot up due to supply disruptions.</p>.<p>Experts said if vegetable prices remained high in the coming weeks, the year 2019-20 could end up with inflation as high as 4%.</p>.<p>Inflation in pulses, meat and fish too increased, posing problems to policy makers making efforts to enhance consumer demand in a slowing economy.</p>.<p>The RBI, which has handed over five policy rate cuts of 135 basis points since February to give a leg-up to economic growth on the back of subdued inflation, may find it difficult to keep up with its rate-cut cycle.</p>.<p>The wholesale price inflation, however, eased to 0.33% in September as against 1.08% in August. One reason for lower inflation print in WPI could be that it has a lower weight for food products while CPI has a higher weight of food category at 46%.</p>.<p>Besides, WPI inflation reflects changes in producer prices, while CPI measures variations in prices of a basket of consumer goods and services.</p>.<p>The RBI tracks Consumer Price Index inflation as the main metric to decide its monetary policy.</p>.<p>Other than that, it also tracks industrial production numbers that has contracted in August.</p>
