 "Food arrests further decline in WPI")
However, the fall was less steep, at -4.54 per cent compared with -4.95 per cent in August. Weakness in global crude oil and commodity prices kept inflation low and in the negative territory. But with food inflation (primary + manufactured food) turning positive, and the decline in manufactured production inflation lower, overall inflation nosed up.
The core inflation, as measured by CRISIL Core Inflation Indicator (CCII), remained fairly stable - only marginally up from August is reflective of sluggish domestic demand conditions.
The increase rode mainly on pulses and edible oils, where inflation jumped to 38.6 per cent and 3.2 per cent from 36.4 per cent and 1.4 per cent, respectively, in August. This highest inflation rate among food articles was recorded in tur (arhar) at 54.3 per cent, followed by gram (44.8 per cent) and urad (37.6 per cent).
A second monsoon shock - all-India rainfall was 14 per cent deficient this year and 12 per cent deficient last year - has affected kharif output this year. Acute rainfall deficiency and prolonged dry spells in pulses growing states like Maharashtra, Uttar Pradesh and Karnataka has affected pulses production. Tur production, for instance, is estimated to be five per cent lower on-year. At the same time, oilseeds production is expected to be one per cent lower on-year, and explains the price pressure this commodity is facing.
Manufactured products also saw a run-up in inflation, coming in at -1.7 per cent compared with -1.9 per cent in August. Here, besides manufactured food, inflation was higher in transport, equipment and parts.
But the rest of the categories witnessed a decline due to continued softening of global prices and sluggish domestic demand conditions. A sharp decline in global crude oil and commodity prices has more than offset the fall in the rupee and brought down input costs for Indian manufacturers. So far this financial year, global metals and minerals prices have fallen an average 20.7 per cent on-year and global fuel prices have slipped 45.2 per cent, while the rupee has weakened by only 6.7 per cent. This has brought down input costs substantially for Indian manufacturers.
Disinflationary pressures on core and manufactured products indices have intensified given excess capacities in the manufacturing sector because of slack domestic demand. A deficient monsoon has further dented rural incomes and slowed the pace of consumption recovery.
The sluggishness is clearly visible from a sustained decline in CCII over nearly 14 months now, though it has been fairly stable over the past three months and rose marginally to -0.7 per cent from -0.8 per cent the previous month.
Another measure of core inflation, the non-food manufacturing inflation (which includes the volatile base metals category), was unchanged from August at -1.9 per cent.
CCII offers a better perspective on core inflation because it negates the effect of volatile categories. It excludes the 'base metals' category since their prices are mostly determined by changing global demand-supply dynamics and volatility in exchange rate rather than just domestic conditions.