The high food inflation rate of 8.6% in September contributed to consumer price index (CPI)-based inflation, while the fall in factory output was due to a decline in mining and manufacturing output.
The Reserve Bank of India has officially missed the inflation target for the third consecutive quarter and the retail inflation print for September is above the 6% threshold.
RBI Governor Shaktikanta Das said last month that he expects inflation to come down to 4% in the next two years.
As per the RBI Act, RBI’s Monetary Policy Committee (MPC) has an inflationary objective of 4%, with a 2% margin of error on either side. If average inflation exceeds the range of 2%-6% for three consecutive quarters, it is seen as a failure by the RBI.
Das, however, insisted that the RBI would not make public its official letter to the government on the matter. “This is a privileged communication between the Reserve Bank and the government. So at this point of time we cannot say whether it will be made public or not. On our part we will not make it public as it is a privileged communication,” Das said. .
The World Bank and the International Monetary Fund have lowered their growth forecasts for India to 6.5% and 6.8%, respectively, for FY13, due to the country’s rising inflationary challenges. In its most recent monetary policy, the Reserve Bank of India lowered its growth outlook for FY13 from 7.2% to 7%.