Press Trust of India
New Delhi, Sept 14: Deflationary trend continued for 10th month in a row with WPI inflation plunging to a historic low of (-)4.95 per cent in August on cheaper commodities, a development that may prompt RBI to cut rates later this month. But for onion and pulses, wholesale prices of most of the food articles either declined or showed a very marginal increase during the month. Economic Affairs Secretary Shaktikanta Das said there has been a considerable improvement in the price situation.
“RBI will take a considered call on the issue. There is no divergence in perception. The government and RBI are working together. Taking into account the overall factors, RBI will take a considered call,” he said. The Wholesale Price Index-based inflation was (-)4.05 per cent in July. It has been in the negative zone since November 2014. In August last year, it was 3.85 per cent. Inflation in onions and pulses was at 65.29 per cent and 36.40 per cent respectively during August, as per official data released Monday. Overall, food inflation basket remained in the negative territory for second month in a row at (-)1.13 per cent. For vegetables, it was (-)21.21 per cent, helped by potato where inflation was (-)51.71 per cent. Inflation in the fuel and power segment was (-)16.50 per cent, while that of manufactured products was (-)1.92 per cent in August.
Meanwhile, retail inflation fell to a new low of 3.66 per cent in August due to a slower rate of price rise in vegetables, fruits and protein items, except pulses, which may prompt the Reserve Bank to cut rates at its September 29 policy meet. Food inflation measured on Consumer Food Price Index during the month, however, rose slightly in August at 2.20 per cent as against 2.15 per cent in July 2015, government data showed Monday. Besides, the rate of price increase in vegetables was recorded at a negative 6.36 per cent during the month under review, while fruits were cheaper with an inflation print of 0.99 per cent. In August 2014, retail inflation was at 7.03 per cent.
The Consumer Price Index (CPI) based retail inflation for July 2015 was revised downwards to 3.69 per cent from 3.78 per cent, according to government data. However, prices of protein rich pulses continued to rise at a higher rate with inflation for ‘pulses and products’ category remaining firm at 25.76 per cent. However, among other protein rich items such as meat and fish, the rate of price rise was slower at 5.79 per cent. Likewise, milk and its products were also cheaper in August than a year ago level at an inflation figure of 5.33 per cent.
