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December WPI inflation at 8-month low of 3.8%, increases rate cut hopes

Second consecutive month of decline in wholesale price index-based inflation... Rate was 4.64% in November and 5.54% in October

December WPI inflation at 8-month low of 3.8%, increases rate cut hopes

New Delhi: Softening prices of fuel and some food articles pulled WPI inflation to a 8-month low of 3.80 per cent in December raising hopes for a rate cut by the RBI.

This is the second consecutive month of decline in Wholesale Price Index (WPI)-based inflation. The inflation was 4.64 per cent in November, 2018 and 5.54 per cent in October.

In December 2017, WPI inflation stood at 3.58 per cent.

According to the government data released Monday, deflation in food articles stood at 0.07 per cent in December, against 3.31 per cent in November.

Vegetables continued its deflationary trend for six months and was at 17.55 per cent in December, compared to 26.98 per cent in the previous month.

Inflation in the 'fuel and power' basket in December slumped to 8.38 per cent, nearly half of 16.28 per cent in November. This was on account of lowering of prices of petrol and diesel through December. Individually, in petrol and diesel inflation was 1.57 per cent and 8.61 per cent, respectively, and for liquified petroleum gas (LPG) it was 6.87 per cent during December.

"The continuing deceleration in the growth of WPI and softening of global fuel prices provide ample opportunity to MPC (monetary policy committee) to cut down policy rate at earliest which will kick start investment and revival in overall industrial growth," Assocham said.

Inflation in manufactured items slowed to 3.59 per cent in December, from 4.21 per cent in November. Among food articles, potato prices became cheaper substantially with inflation at 48.68 per cent in December, as against 86.45 per cent in November.

Inflation in pulses stood at 2.11 per cent, while in 'egg, meat and fish' it was 4.55 per cent.

Onion witnessed deflation of 63.83 per cent in December, compared to 47.60 per cent in November. Deflation in fruits was at 3.69 per cent in December, as against 2.49 per cent in the previous month.

The 3.80 per cent inflation is the lowest in 8 months, and a lower inflation than this was last seen in April at 3.62 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, last month, 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 has 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.


Retail inflation slows to 18-month low of 2.19%

New Delhi: Retail inflation declined to an 18-month low of 2.19 per cent in December 2018 mainly on account of sliding prices of fruits, vegetables and fuel.

The inflation based on the Consumer Price Index (CPI) was 2.33 per cent in November and 5.21 per cent in December 2017.

The previous low inflation was 1.46 per cent in June 2017.

According to the data released by the Ministry of Statistics and Programme Implementation, food inflation remained in the negative zone at 2.51 per cent compared to (-) 2.61 per cent in the November.

The rate of price rise in vegetables, fruits and protein-rich eggs continued to decline.

However, there was a marginal increase in prices of meat, fish, and pulses.

Fuel and light inflation was 4.54 per cent in December, down from 7.39 per cent in November on back of reduction in prices of petrol and diesel.

Another data released earlier in the day showed that inflation based on wholesale prices fell to an eight-month low of 3.80 per cent in December, 2018, on softening prices of fuel and some food items.

The Wholesale Price Index-based inflation stood at 4.64 per cent in November 2018 and 3.58 per cent in December 2017.

PTI

PTI

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