The wholesale price index (WPI)-based inflation rate eased to a six-month low of 10.66 per cent in September from 11.39 per cent in the previous month, but it remained in double digits for the sixth straight month. The deceleration was caused by a fall in food prices for the second month in a row.

       However, certain metals saw rise in inflation while fuel saw moderation in the rate of price rise due to the base effect even as the pace was still elevated at more than 20 per cent in September as global commodity prices hardened.

       Experts caution that the inflation rate may average double digits in the current financial year, but they do not expect the Reserve Bank of India's Monetary Policy Committee (MPC) to raise the policy rate unless demand side factors push up the rate of price rise.

       The MPC generally takes into account the retail price inflation rate. The softening of the WPI inflation rate was in line with the consumer price index (CPI) rate of price rise which fell to a five-month low of 4.35 per cent in September from 5.59 per cent in the previous month.

       Food items continued to witness deflation and in fact, the pace of price fall sharpened to 4.69 per cent from 1.29 per cent over this period.

       The deflation was dominated by vegetable prices which kept on falling for the 10th month in a row with the rate of deceleration increasing to 32.45 per cent in September from 13.30 per cent in the previous month. Within vegetables, potato prices fell by 48.95 per cent against 39.81 per cent during this period. In fact, onion prices too fell by 1.91 per cent against the rise during the period.

       Protein items such as eggs, meat, fish and pulses saw the inflation rate inching up. In case of non-vegetarian items, it crawled up to 5.18 per cent from 3.46 per cent, while pulses saw it rising moderately to 9.42 per cent from 9.41 per cent over the period under review.

       Non-food primary articles (unprocessed ones), on the other hand, saw the inflation rate hardening to 29.4 per cent from 28.76 per cent with all the sub-category of minerals, oilseeds, crude petroleum and natural gas showing increase in the rate of price rise.

       Inflation rate in fuel and power declined to 24.81 per cent from 26.09 per cent. Within this category, petrol and diesel prices too, moderated though they remained elevated at 54.85 per cent and 51.80 per cent, respectively, in September.

       "The sequential decline in the WPI inflation in September 2021 relative to August 2021 benefitted from primary food items slipping into a deeper deflation of 4.7% (eight-month low), with a sharp decline in vegetable prices, and a base-effect led easing in the inflation for fuel and power," Aditi Nayar, chief economist at ICRA said.

       However, the inflation rate for the other categories either hardened or remained unchanged in October 2021, with a renewed surge in the global prices of many commodities, she said.

       Inflation in cement and steel hardened further in September.

       Nayar cautioned that after four months of consecutive moderation, the WPI inflation rate may rise in October 2021, and remain in double-digits in Q3, FY'22.

       "While a favourable base will moderate the WPI inflation rate during Q4 FY'22, it is nonetheless likely to average around 10% in FY'22," she said.