IIP rises 6.4 per cent, fastest in 3 years

Hargreaves Lansdown senior economist Ben Brettell says: “The usual suspect of falling fuel costs, coupled with smaller-than-usual increases in clothing prices pushed the United Kingdom inflation rate back into negative territory in September, once again putting no pressure on the Bank of England to lift interest rates”.

The country’s consumer price index (CPI) – a main gauge of inflation – rose 1.6 year-on-year in September, the National Bureau of Statistics said, down from August’s 2.0 percent. Falling petrol and energy prices also played a role, with pump prices down by 3.7p per litre on the previous month.

British Chancellor of the Exchequer, or finance minister, George Osborne stressed Tuesday that negative inflation was not the same as deflation, which refers to a prolonged period of falling prices.

The pound fell to a one-week low against the dollar after the data and was trading at $1.5258 as of 9.34am in London.

Reserve Bank Governor Raghuram Rajan had on September 29, announcing the bi-monthly Monetary Policy Statement, said: “Despite the monsoon deficiency and its uneven spatial and temporal distribution, food inflation pressures have been contained by resolute actions by the government to manage supply”.

However, he maintained that the likely timing of a rate hike was “drawing closer”.

“However it is low compared to 5.6 per cent in September 2014”.

Inflation came in at -0.1pc in September, matching the lowest level seen in the United Kingdom economy since 1960.

‘Further weakness in the global economy could lead to renewed falls in oil and other commodity prices.

Economists had forecast consumer inflation to rise to 4.3 percent last month, and many of them expect it to remain below RBI’s forecast of 5.8 percent by January 2016.

Even so, the state pension will continue to rise faster than the current inflation rate.

The figures will reinforce the view that the BOE is still months away from raising its benchmark interest rate from a record-low 0.5 per cent.

To revive growth by spurring lending activities, RBI has so far this year cut rates it charges banks for short-term loans by 125 basis points to 6.75 per cent as inflation started trending down in the past 15 months.

Commenting on the CPI figures, Devendra Kumar Pant, chief economist, India Ratings & Research said: “September 2015 CPI at 4.41 percent was higher than Ind-Ra expectation of 3.9 percent”.

“Inflation should still see a few rebound when the anniversary of the fall in oil prices in late 2014 is reached”. The first advance estimates indicated that food grain production is expected to be higher than a year ago.