Wholesale inflation hits a new low of -4.95%

CPI inflation comfortable too in August at 3.66%

In a relief to the common man battling rise in prices, India’s retail inflation came down below 4 per cent to 3.66 per cent in August, backed by lower prices of fruits and vegetables, but pulses remained costlier.

Food inflation in August was slightly higher than in July, and came in at 2.20 per cent, while vegetable price inflation stood at -6.36 per cent against -7.93 per cent, last month. Food and beverages account for 46 per cent of the CPI basket.

Wholesale price inflation too declined for the 10th consecutive month and was at -4.95 per cent in August, against 4.05 per cent in July. The decline, however, was attributed to a high base effect in the month of August, last year.

Buoyed by the encouraging inflation data, Finance Minister Arun Jaitley said that the price situation was moderating and seemed to be under control.

On the retail side, prices of pulses continued to rise at a higher rate with inflation at 25.76 per cent in this category. Pulses were dearer in the wholesale markets too by above 36 per cent. Onions too remained costlier.

Besides pulses and onion, eggs, meat and fish too became dearer in the wholesale market. But given an all-round slide in prices, industry bodies heightened the call for an interest rate cut by the Reserve Bank of India. The Finance Ministry too said that the RBI will take a considered call after weighing inflation and other factors.

“We expect the RBI to reduce interest rates by 0.50 per cent in the forthcoming policy with statements supporting further easing in the near future,” CII Director-General Chandrajit Banerjee said.

“Under the present circumstances, it would be most appropriate for the RBI to give weight to growth considerations and announce a deeper cut in the policy rate,” Ficci president Jyotsna Suri said. The Reserve Bank’s next bi-monthly monetary policy review is on September 29. While deciding on the key interest rate, it mostly tracks the Consumer Price Index-based inflation.