FM: Good monsoon will ease inflation

Sees marginal rise in October at 9.73%

WPI (Wholesale Price Index) Inflation was at 9.08 per cent in October 2010.
On an annual basis, food items became 11.06 per cent costlier on-year in October, but inflation in fuel and power segment stood at 14.79 per cent as against 14.09 per cent in September.

“I do hope that the full impact of the good monsoon will be felt and steps we have taken to improve the supply side will yield results,” Mukherjee said, adding that the main reason for high inflation from April to October was spike in prices of food articles.

The rise in fuel price index may have been due to the impact of the September hike in petrol prices by more than Rs 3 per litre, analysts said. Petrol has a weightage of 1.09 per cent in the overall wholesale price index.

But, the November 4 rise in petrol prices by Rs 1.80 per litre is further expected to stoke inflationary pressures in the economy, already hit by a depreciating rupee. Rupee fell to its lowest level in two and a half years at 50.18 per dollar on Friday, making country’s oil imports costlier.

According to calculations, a Rs 1.80 per litre hike in petrol prices is expected to translate into 0.27 percentage point increase in headline inflation.

Vegetables grew 21.76 per cent costlier on-year in October, while fruit prices rose by 11.96 per cent and milk by 11.12 per cent during the month. Eggs, meat and fish witnessed 12.59% inflation during October 2011.

Mukherjee said the decline in the rate of price rise in primary articles was neutralised by rising food prices.

Inflation in overall primary articles came down to 11.40 per cent in October compared to 11.84 per cent the previous month.

Non-food primary articles, which include fibres, oil seeds and minerals, grew dearer by 7.71 per cent in October.

Prices of manufactured products, which have a weight of around 65 per cent in the WPI basket, went up by 7.66 per cent year-on-year in October.

Inflation in manufactured items has been high since February this year, when it crossed the 6 per cent mark.