Even on a year-on-year (YoY) basis, the Consumer Price Index (CPI) in September 2018 was higher than in the corresponding period of last year, when it stood at 3.28 per cent.
According to the data furnished by the Central Statistics Office (CSO), the Consumer Food Price Index (CFPI) rose 0.51 per cent in September from 0.29 per cent in August 2018.
Instead, India's industrial output eased in August with a slower rise of 4.3 per cent as compared to 6.52 per cent in July.
CSO data also showed the Index of Industrial Production (IIP) in August was lower even on a YoY basis.
The industry output had increased by 4.8 per cent in August 2017.
"The cumulative growth for the period April-August 2018 over the corresponding period of the previous year stands at 5.2 percent," said the Quick Estimates of IIP for August 2018.
On the YoY basis compared to August last year, factory output's growth expanded by 4.6 per cent, whereas the mining sector's production declined by (-) 0.4 per cent and the sub-index of electricity generation increased by 7.6 per cent.
Commenting on the latest data, rating agency Crisil said the overhang of food disinflation is very visible despite higher fuel prices and the ongoing depreciation of the rupee.
"Consumer inflation for September surprised at 3.8 per cent, a clear 20 bps (basis points) below the RBI's medium-term target for the second straight month. Mind you, this is despite higher fuel prices and depreciation in the rupee," Crisil Chief Economist Dharmakirti Joshi said in a statement.
"The slowdown in manufacturing and mining weighed the Index of Industrial Production down 220 bps in August to 4.3 per cent over July," he added.
Industry chamber Assocham welcomed the benign retail inflation of last month.
"Even as the fuel inflation of 8.47 per cent was a given in the wake of sharp rise in the crude oil prices, the impact is not seen creeping into the rest of the basket of consumer items, most notably the food and vegetables. So any worry about the consumer inflation, impacting the interest rates, is abated for now, as the level of price rise is well below the RBI target of 4 per cent," an Assocham statement said.
"As for the industrial growth of 4.3 per cent for August, sectors like manufacturing and capital goods still need a leg up, while infrastructure and construction are visibly improving."
Belying market expectations of a hike, the RBI earlier this month held its key lending rate unchanged at 6.5 per cent in the context of an uncertain global economic scenario but turned hawkish, moving to a "calibrated tightening" from the "neutral" stance it has maintained over its six previous policy reviews.
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