Diesel price hike impact on inflation of 7.81% 'lower than expected': CII

Diesel price hike impact on inflation of 7.81% 'lower than expected': CII New Delhi: Even as India's headline inflation, measured on the basis of wholesale prices, rose to 7.81 percent in September from 7.55 percent in August this year, the impact of the hike in diesel prices, and other fuels on it was lower than expected, Director General of Confederation of Indian Industry (CII), Chandrajit Banerjee has said.

"India's headline inflation, measured on the basis of wholesale prices, has increased marginally to 7.81 per cent in September 2012 as against 7.55 percent in August 2012, in spite of increase in fuel prices, especially that of diesel," a CII press release quoted Banerjee, as saying.

"It was already anticipated that the hike in diesel prices would have a negative fallout on inflation in the short run, however the impact seems to be lower than expected," he added.

Banerjee also highlighted that the good news for India was the decline in the food prices in the month of September as against August, thereby reducing the overall inflation, which should spur the Reserve Bank of India (RBI) to revisit its monetary policy.

"The good news is that food prices have witnessed a decline in prices in September 2012 as compared to the previous month and manufacturing prices are reasonably stable. Besides, overall inflation is on the declining curve as compared to the same period last year," he said.

"The declining trajectory of inflation should spur the RBI to revisit its monetary policy stance and cut its policy rates to rejuvenate growth in the industry which has been hit by high interest costs and flagging investments," he added.

ANI