The annual rate of WPI (wholesale price index)-based inflation eased a tad to 7.45 per cent in October from 7.81 per cent in the previous month even as select food commodities continued to rule at higher levels.
Although the inflation level this October was markedly lower as compared to the high of 9.87 per cent during the same month a year ago, the fact that it remained sticky at over 7 per cent at a time when the CPI (consumer price index)-based retail inflation has been hovering near the 10 per cent-mark may bring hardly any comfort to the Reserve Bank of India (RBI) for easing interest rates during the mid-quarter review of its monetary policy on December 18.
This is despite the fact that while growth projections for the economy have been significantly lowered, including the RBI which has scaled it down from 6.5 per cent to 5.8 per cent for 2012-13, the deceleration in export growth coupled with a contraction in factory output has also dashed hopes of the pick-up during the second-half of the fiscal year.
However, India Inc., which has been pressing for a cut in interest rates to kick-start investment and industrial activity, sought to argue its case for a rate cut by interpreting the figures positively.
Highlighting the rosier side of the WPI data, FICCI President R. V. Kanoria said: “The inflation numbers are showing signs of moderation with inflation coming down from 8 per cent in August 2012 to 7.81 per cent in September 2012 and further down to 7.45 per cent in October 2012. This should encourage RBI to fine-tune the monetary policy with the view to bolster growth, particularly that of the manufacturing sector”.
Pressing further ahead with his line of argument, the chamber chief said: “Some of the key economic indicators, be it GDP growth or industrial production, continue to remain soft and highlight the sluggishness in the domestic economy.
The slowdown in the growth momentum has a clear bearing on employment generation and hence we must do everything possible to turn the tide of weak growth.
The government has already initiated a series of reform measures. The Finance Ministry has also reiterated its resolve to rein in the fiscal deficit.
Given these moves, we feel that RBI should also take steps that would support growth and lift business sentiment.”
As per official data, inflation in food articles, which accounts for a 14.3 per cent share in the WPI basket, declined to 6.62 per cent in October 2012 from 7.86 per cent in the previous month. And this was despite the fact that wheat turned dearer by 19.78 per cent and cereals by 14.35 per cent. Alongside, potatoes were costlier by 49.13 per cent, pulses by 20 per cent and rice by 11.40 per cent on a year-on-year basis. Vegetable prices, however, eased by 7.45 per cent.
Also, while inflation in the fuel and power category eased to 11.71 per cent during the month from 11.88 per cent in September, the price spiral in manufactured products was pegged at 5.95 per cent in October, marginally down from 6.26 per cent in the previous month.
Meanwhile, headline inflation for August was marked up to 8.01 per cent on revision from the provisional estimate of 7.55 per cent earlier.