Oct 14, 2022 02:55AM ET
Indian wholesale inflation fell more than expected in September, data showed Friday, helped mainly by falling fuel and food costs as headwinds in global commodity markets eased.
The wholesale price index, which is India's producer price gauge, fell to 10.70% in September, below expectations of 11.50% and last month's reading of 12.41%.
But the reading remained in double-digit territory for the 18th consecutive month, keeping the door open for more rate hikes by the Reserve Bank this year.
Last month, the central bank raised interest rates by 50 basis points, its fifth consecutive hike this year, in its attempt to curb runaway inflation in the country.
Fuel price inflation retreated slightly on the month as oil markets recorded their worst month in more than two years in September. Food costs also eased from yearly highs.
But cost pressures persisted at the retail level. Rising fuel and food prices caused India's consumer price index to rise more than expected in September, heralding further pressure on the Indian economy.
The deep devaluation of the rupee, which hit a record low last week, has also increased cost pressures in the country as imports become more expensive. This has hit fuel-dependent sectors especially hard, as India imports around 80% of its crude oil needs.
But the central bank faces an uphill battle to support the rupee as rising US interest rates have hit most emerging market currencies this year. The worsening global economic outlook is also expected to keep risk appetite for the rupee.
Still, India is expected to fare much better than most major economies this year, with the International Monetary Fund forecasting economic growth of 6.1% this year, much higher than the world's four largest economies.
The Reserve Bank of India expects the economy to grow at around 7% in fiscal 2023.