Inflation down at 5-year low of 3.07%
Cheaper fruits and vegetables and some manufactured items pulled inflation to a five-year low of 3.07 per cent for the week ended October 6, but analysts said it would not trigger a return to soft monetary policy.
By PTI |
NEW DELHI: Cheaper fruits and vegetables and some manufactured items pulled inflation to a five-year low of 3.07 per cent for the week ended October 6, but analysts said it would not trigger a return to soft monetary policy.
The wholesale price-based index stood at 3.07 per cent in the previous week and 5.36 per cent in the corresponding week last year.
Inflation has been way below RBI's projection of 5 per cent for this fiscal and even its target of 4-4.5 per cent in the medium term. However, downward risks to inflation remains because of high global oil prices, RBI has said.
Global crude oil prices are ruling around a record high of $88 a barrel.
The fall in inflation rate has fuelled expectations that Reserve Bank could reduce interest rates in its half-yearly monetary review on October 30.
"Although there are expectations of rate cut, in the given scenario there is very little possibility of lowering the benchmark rates," HDFC Bank Chief Economist Abheek Barua said.
Hike in the Cash Reserve Ratio (CRR) would not come immediately in the wake of capital outflow in the past 3-4 days, he added.
Echoing similar voice Lehman Brothers Chief Economist Asia Robert Subbaraman said, interest rates are likely to remain stable for some time, though it could come down over the next five years. Also, CRR could also be hiked by 50 basis points only in December, he added.
During the week, fruits and vegetable prices dipped by 4 per cent, eggs and fish-marine fell marginally by 1 per cent, while bajra and maize declined by 2 per cent each. Among manufactured items, prices of oil cakes and gur declined also declined marginally by 1 per cent each.
The wholesale price-based index stood at 3.07 per cent in the previous week and 5.36 per cent in the corresponding week last year.
Inflation has been way below RBI's projection of 5 per cent for this fiscal and even its target of 4-4.5 per cent in the medium term. However, downward risks to inflation remains because of high global oil prices, RBI has said.
Global crude oil prices are ruling around a record high of $88 a barrel.
The fall in inflation rate has fuelled expectations that Reserve Bank could reduce interest rates in its half-yearly monetary review on October 30.
"Although there are expectations of rate cut, in the given scenario there is very little possibility of lowering the benchmark rates," HDFC Bank Chief Economist Abheek Barua said.
ADVERTISEMENT
Hike in the Cash Reserve Ratio (CRR) would not come immediately in the wake of capital outflow in the past 3-4 days, he added.
Echoing similar voice Lehman Brothers Chief Economist Asia Robert Subbaraman said, interest rates are likely to remain stable for some time, though it could come down over the next five years. Also, CRR could also be hiked by 50 basis points only in December, he added.
During the week, fruits and vegetable prices dipped by 4 per cent, eggs and fish-marine fell marginally by 1 per cent, while bajra and maize declined by 2 per cent each. Among manufactured items, prices of oil cakes and gur declined also declined marginally by 1 per cent each.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
