Food articles witnessed softening of prices with deflation at 3.31 per cent in November, as per released government data.
New Delhi: India’s wholesale inflation fell to a three-month low of 4.64 per cent in November, driven down by decline in prices of food articles, especially vegetables, and some easing in rates of petro products.
The Wholesale Price Index (WPI)-based inflation stood was 5.28 per cent in October and 4.02 per cent in November last year.
Food articles witnessed softening of prices with deflation at 3.31 per cent in November, against 1.49 per cent in October, government data released Friday showed.
Vegetables, too, became cheaper with deflation at 26.98 per cent in November, compared to 18.65 per cent in the previous month.
Inflation in the ‘fuel and power’ basket in November continued to rule high at 16.28 per cent, but was lower than 18.44 per cent in October. This was on account of lowering of prices of petrol and diesel, following a decline in global crude oil prices.
Separately in petrol and diesel, inflation was 12.06 per cent and 20.16 per cent, respectively, and for liquified petroleum gas (LPG), it was 23.22 per cent during October.
ICRA Principal Economist Aditi Nayar said the easing of the WPI inflation was led by a deeper disinflation in prices of primary food articles, easing of inflation related to crude petroleum and mineral oils following the correction in retail fuel prices, and some impact of the appreciation in the rupee on the landed prices of imports.
“The recent trend of a year-on-year correction in food prices does not augur well for the strength of rural demand in the immediate term. However, factors such as weak post-monsoon rainfall and a delay in rabi sowing pose some uncertainty regarding how long food prices would remain in the disinflation zone,” Nayar said.
Nayar said with the recent stability in the crude oil prices and the rupee, ICRA expects the WPI inflation to range between 3.7-4.4 per cent in the remainder of second half for current fiscal.
Among food articles, potato prices continued to rule high with 86.45 per cent inflation in November. While onion witnessed deflation of 47.60 per cent, the same for pulses stood at 5.42 per cent.
The November inflation at 4.64 per cent is the lowest in three months, and a lower inflation than this was last seen in August at 4.62 per cent.
CARE Ratings, in its analysis, said it expects WPI inflation to remain in the range of 4.5-5 per cent for the rest of the year, and will be above the CPI rates.
The WPI inflation for September, however, has been revised upwards to 5.22 per cent, from the provisional estimate of 5.13 per cent.
Data released earlier this week showed that the retail or consumer price index-based inflation for November also fell to a 17-month low at 2.33 per cent.
The Reserve Bank of India (RBI) mainly takes into account retail inflation data while formulating monetary policy.
In its fifth monetary policy review for the fiscal, released last week, the Reserve Bank kept interest rates unchanged, but held out a promise to cut them if the upside risks to inflation do not materialise.
The central bank lowered retail inflation projection to 2.7-3.2 per cent for the second half of the current fiscal, citing normal monsoon and moderate food prices. – PTI