Wholesale inflation inched up to 0.11 per cent in December from 0 per cent in November on the back of a surge in food prices, raising hopes of a rate cut by the Reserve Bank of India in its next Monetary Policy Review, scheduled to be held on February 3.
Wholesale inflation in food, according to official data released on Wednesday, shot up to 5.2 per cent, a five-month high. It was 0.63 per cent in November. Inflation in pulses, vegetables and fruits was higher in December over the previous month. The rise in food prices is attributed to the increase in prices in vegetables, fruits, pulses, onion and potatoes.
Inflation as measured by the wholesale price index (WPI) has been on the decline since June. The sub-1 per cent WPI inflation figure soon comes after the latest retail inflation data, released on Monday, at 5 per cent, too showed a marginal increase, and yet remained below expectations. With global crude now below $50 a barrel, fuel inflation continued to fall. Wholesale inflation for fuel fell to minus 7.82 per cent in December against minus 4.91 per cent in November.
Conducive situation Commenting on the WPI inflation, Confederation of Indian Industry Director-General Chandrajit Banerjee said that the December figure was much more favourable than anticipated. The CII hopes that the conducive inflationary situation would spur the RBI to move away from its inflation-centric approach to policy making and focus on rejuvenating growth in the economy and industry, in its forthcoming monetary policy, he said in a statement.
“India can draw some comfort from the sharp drop in oil prices, which is reflected in the drop in fuel-led inflation by 7.8 per cent…Further, the manufacturing recovery in November, 2014, comes over a low base, and we are not yet sure about a firm turnaround. To give a boost to the capex cycle, there is an urgent need for lowering of lending rates. Since inflation is largely under control, we urge the Reserve Bank to ease the monetary policy stance,” said FICCI President Jyotsna Suri in a statement.
