German Consumer Prices Fell in September, in Line With Forecasts

German Consumer Prices Fell in September, in Line With Forecasts

In August, consumer price inflation was at 6.69%.

In a double whammy for the economy, industrial production declined 8 per cent in August, while retail inflation rose to an eight-month high of 7.34 per cent in September, further delaying a rate cut by the central bank to bolster the shrinking economy.

Consumer durables and consumer non-durables ouput, indicators for consumption demand, contracted 10.3 per cent and 3.3 per cent, respectively, in August.

According to the CPI data, food inflation in September was at 10.68% as against 9.05% in August. The rate of price rise in protein-rich eggs was 15.47 per cent in September compared with 10.11 per cent in August. It is happening from consecutive six months.

Retail inflation has remained above 4 per cent, the middle-point of the RBI's target of 2-6 per cent, for a year.

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The bad news continued with the industrial output contracting 8 per cent in August compared to the same month a year ago, showing that the after-effects of the Covid-19 lockdown have not worn off.

Later, the RBI Governor had informed that the central bank has chose to keep the key policy repo rate unchanged at 4 per cent.

The on-year decrease in energy-product prices had a downward effect on the inflation rate.

Last week, the RBI left key policy rates unchanged amid fears of elevated inflationary pressure, while retaining an accommodative monetary stance to support an economy that is projected to contract by nearly 10 per cent in the current fiscal year. "This number will be in the range of 6%-7% in October too as vegetable prices continue to rise and will exert pressure", said Madan Sabnavis, chief economist at CARE Ratings in a note titled 'Double Jeopardy for the Economy'. In RBI's survey round of September 2020, household expected inflation to come down.

There was a steep 8.6 per cent decline in manufacturing and a 9.8 per cent drop in mining in August.

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