As expected, September inflation clocked in on the higher side, closing in at 7.68 percent year-on-year. Having touched a 14-month low in August, the low base effect was expected to push CPI slightly higher. CPI in the first quarter has averaged 7.6 percent, well within the FY15 estimations of 8-8.2 percent.
It was more of the same old, with the usual suspects pushing the index. The major increase was seen in perishable food prices, which soared by nearly 16 percent year-on-year. Vegetable prices generally tend to increase a fortnight leading to Eid-ul-Adha, which could be one reason for perishable food price increase.
The non-food inflation continues to be on the higher side at 8 percent year-on-year. Even the month-on-month increase in non-food inflation is significant at 0.6 percent, as compared to zero percent month-on-month food inflation. Positively, the trimmed core inflation has remained stagnant on previous months level of 7.1 percent, lowest in 15 months.
Housing, water, electricity and gas sub-index showed minimal change month-on-month, although nearly 9 percent increase in year-on-year numbers reflect the 16 percent power tariff increase done last year. The single largest month-on-month impact was caused by transport, where transport services recorded an increase of 8.52 percent month-month. Motor fuel rates have largely been flat of late, which brings this as a surprise. Perhaps, there was some yearly revision in the railway fares.
For those wishing to track flood impact in these numbers, there does not appear any. History suggests it comes with a lag. Official loss assessment is yet to be done, but if the rice crops are hurt, it may have an impact on exports and a further pressure on rupee, which may not bode well for inflation in the last months of 2014.

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September- 2014 CPI - Key items
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                           YoY (%)       MoM (%)
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General                    7.68             0.35
Food & bev                 6.47             0.00
Non-persishable            4.77             0.01
Perishable                 15.95           -0.03
Clothing & footwear         8.98            0.37
"Housing, water,
electricty, gas & fuels"    8.84            0.03
Transport                   5.43            3.22
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Source: PBS