New Delhi: Even as prices of pulses and potatoes ruled high, India’s annual rate of inflation based on wholesale prices fell marginally to 3.39 per cent for October from 3.57 per cent for the previous month, official data showed on Tuesday.
According to data on the wholesale price index released by the Commerce and Industry Ministry, the annual inflation rate has climbed to the current level from a decline of (-)3.70 percent in October last year.
Further, the annual inflation rate for potatoes (October on October) stood at a whopping 60.58 percent, while that for pulses stood at 21.8 per cent.
Onion prices, though, were down (-)65.97 per cent. Overall, vegetable prices came down by (-)9.97 per cent.
Protein-based food items such as eggs, meat and fish became dearer by 6.20 per cent. Besides, wheat became expensive by 6.30 per cent.
“The build-up inflation rate in the financial year so far (that is, from April to October) was 4.34 per cent, compared to a build-up rate of 0.45 per cent in the corresponding period of the previous year,” an official statement said.
The expenses on primary articles, which constitute 20.12 per cent of the WPI’s total weight, rose by 3.31 per cent.
Prices of manufactured products, which comprise nearly 65 per cent of the index, continued to rise for the seventh straight month, rising by 2.67 per cent last month. The prices in this category had risen by 2.48 per cent in September.
The sub-category of manufactured food products, which includes sugar and edible oils, registered a rise of 10.48 per cent.
This was mainly caused by a spurt in sugar prices, which rose by 29.63 per cent, as a result of production shortages. The cost of edible oils rose by 4.59 per cent.
Similarly, fuel and power price inflation accelerated in October. It edged up by 6.18 per cent as compared to a 5.58 per cent rise in September and 1.62 per cent in August.
Diesel price continued to rise after seeing an uptrend which started in June after many successive months of fall. Price of high-speed diesel rose by 19.32 per cent last month.
Gasoline or petrol price climbed by 3.57 per cent, while LPG cost inched up by 0.06 per cent.
The slow down in WPI-based inflation led India Inc. to urge the apex bank to continue with its accommodative stand on the monetary policy.
“WPI numbers released today reported further softening in price levels. The food segment reported moderation in prices for the third consecutive month in October,” said Harshavardhan Neotia, President of Ficci.
“Inflation remains within Reserve Bank of India’s (RBI) indicative trajectory, which is a huge positive for the economy, and prices are expected to remain range bound going ahead.”
According to Neotia, the latest move to demonetise Rs 500 and Rs 1,000 currency notes could lead to a temporary squeeze of liquidity.
“Amidst this scenario, it remains critical that both the Government and the RBI take measures to counter any downside impact on economic activity,” Neotia was quoted as saying in a statement.
“FICCI would urge the RBI to continue with an accommodative stance, support the sentiment of investors and consumers, and stabilise demand.”
“An immediate 50 basis points cut in repo rate should be considered by the RBI as well as some measures may be introduced to provide easy finance for sectors like housing, automobiles and consumer durables.”
The Associated Chambers of Commerce and Industry of India (Assocham) cautioned against the rise in sugar and manufactured food prices.
“Even at the WPI level, the year on year sugar prices have gone up by over 29 per cent and manufactured products too are growing by over double digits,” said D.S. Rawat, Secretary General of Assocham.
“Pulses rising by 22 per cent and potato by over 60 per cent too should be watched carefully so that the inflation does not come in the way of moderating interest rates.”
On its part, the PHD Chamber of Commerce and Industry said it expects the inflation to fall below three per cent in the coming months.
“The recent developments has created a good scope for further reduction in repo rate in the forthcoming monetary policy statement scheduled on December 7, 2016,” said Mahesh Gupta, President, PHD Chamber of Commerce and Industry.
“Repo-rate at this juncture should not be more than 6% to give a big push to the economy with the new currency in circulation.”