Cheap food has inflation slimmer at 3.01%
Wholesale price-based inflation softened in the third week of November to 3.01%, from 3.21% in the previous week, on account of lower food and vegetable prices.
By TNN |
NEW DELHI: Wholesale price-based inflation softened in the third week of November to 3.01%, from 3.21% in the previous week, on account of lower food and vegetable prices.
Inflation was ruling at 5.56% during the corresponding period last year. The figure has been well below RBI’s 5% target for the last five months. Meanwhile, the provisional figure for the week ended October 12 has been revised upwards to 3.36% from earlier 3.26%, an official release said on Friday.
Economists feel better rains increased farm production and helped check vegetable and fruit prices. They said an interest rate cut was needed in the wake of a slowdown in GDP growth in the second quarter as a result of sluggish expansion in the manufacturing sector.
“Inflation fell significantly in the August-October period after a series of measures by the government to ease the pressure on the prices of some essential commodities. The government had cut duties on food items and cement to increase supplies, while on the demand side the central bank had tightened monetary policy,” said Ficci’s economic advisor Anjan Roy.
“Now that inflation as well as inflationary expectations have moderated, RBI should finetune its interest rate policy, otherwise its continued hawkish stance would hurt industry and the economy,” Mr Roy said.
On higher crude price’s effect on inflation, economists said it is a matter of concern but as the Centre is in no mood to pass on the burden to consumers, inflation will continue at the lower level.
“Inflation is likely to remain in the comfort zone of 4-4.5%. Higher crude oil price and huge capital inflows into the economy are risks that could impact price stability. The central bank is more concerned about liquidity flows and its impact on inflation.
Still, the money supply continues to remain above RBI’s projected level, (so a) future possibility of rate cut is highly unlikely,” said RIS director general Nagesh Kumar.
The wholesale price index, on which the inflation data is based, declined by 0.1% to 215.4 from 215.7 for the previous week. Most food product prices fell. Prices of fruit and vegetables went down by 5%, condiments and spices by 2%, while jowar, arhar, bajra, fish-marine and urad dropped by 1% each.
However, prices of petroleum derivatives remained unchanged. Prices of non-food articles rose by 0.2%. Prices of groundnut seed, cotton seed raw jute each went up by 1%. The surge was sharp in the prices of manufactured food products.
The price of bran went up by 7%, rice bran oil by 4% and sooji and gingelly by 1% each. But the prices of basic metal alloys and metal products declined significantly. Prices of lead ingots and zinc ingots fell by 10% and 6%, respectively.
Inflation was ruling at 5.56% during the corresponding period last year. The figure has been well below RBI’s 5% target for the last five months. Meanwhile, the provisional figure for the week ended October 12 has been revised upwards to 3.36% from earlier 3.26%, an official release said on Friday.
Economists feel better rains increased farm production and helped check vegetable and fruit prices. They said an interest rate cut was needed in the wake of a slowdown in GDP growth in the second quarter as a result of sluggish expansion in the manufacturing sector.
“Inflation fell significantly in the August-October period after a series of measures by the government to ease the pressure on the prices of some essential commodities. The government had cut duties on food items and cement to increase supplies, while on the demand side the central bank had tightened monetary policy,” said Ficci’s economic advisor Anjan Roy.
“Now that inflation as well as inflationary expectations have moderated, RBI should finetune its interest rate policy, otherwise its continued hawkish stance would hurt industry and the economy,” Mr Roy said.
On higher crude price’s effect on inflation, economists said it is a matter of concern but as the Centre is in no mood to pass on the burden to consumers, inflation will continue at the lower level.
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“Inflation is likely to remain in the comfort zone of 4-4.5%. Higher crude oil price and huge capital inflows into the economy are risks that could impact price stability. The central bank is more concerned about liquidity flows and its impact on inflation.
Still, the money supply continues to remain above RBI’s projected level, (so a) future possibility of rate cut is highly unlikely,” said RIS director general Nagesh Kumar.
The wholesale price index, on which the inflation data is based, declined by 0.1% to 215.4 from 215.7 for the previous week. Most food product prices fell. Prices of fruit and vegetables went down by 5%, condiments and spices by 2%, while jowar, arhar, bajra, fish-marine and urad dropped by 1% each.
However, prices of petroleum derivatives remained unchanged. Prices of non-food articles rose by 0.2%. Prices of groundnut seed, cotton seed raw jute each went up by 1%. The surge was sharp in the prices of manufactured food products.
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The price of bran went up by 7%, rice bran oil by 4% and sooji and gingelly by 1% each. But the prices of basic metal alloys and metal products declined significantly. Prices of lead ingots and zinc ingots fell by 10% and 6%, respectively.
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