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Aided by lower food inflation, especially vegetables, the retail and wholesale price inflation indices softened in October, providing some relief to the common man. The consumer price index-based inflation for October came in at 14-month low of 4.20 per cent.
This retail inflation print was lower than the five per cent CPI inflation recorded in October last year and 4.39 per cent in September 2016.
Wholesale Price Index-based inflation too eased to 3.39 per cent in October from 3.57 per cent in September as food items became cheaper. WPI inflation stood at 3.7 per cent in October 2015.
WPI inflation for August has been revised upwards to 3.85 per cent against a provisional estimate of 3.74 per cent. Under retail inflation index, food articles — which has 47 per cent weightage in the overall index —inflation in October came in at 3.32 per cent .This was lower than food inflation of 5.25 per cent in October 2015 and 3.96 per cent in September 2016.
Food inflation dipped on the back of deflationary pressures from vegetables (-5.74 per cent) and some moderation in pulses inflation at 4.71 per cent.
While October 2016 CPI-based inflation in urban areas was at 3.54 per cent (4.28 per cent in October 2015), the retail inflation in rural areas in October 2016 stood at 4.78 per cent (5.54 per cent ).
In WPI, vegetables witnessed deflationary pressures and was recorded at (-)9.97 per cent in October. Inflation in this category had scaled a high of 28.45 per cent in July. Pulses inflation continued to rule high at 21.80 per cent in October, the latest Commerce Ministry data showed.
Potato witnessed maximum inflationary pressure at 60.58 per cent. Inflation in fruits rose 6.45 per cent during the month.
Overall, the food inflation basket showed moderation with inflation at 4.34 per cent in October as against 5.75 per cent in previous month.
Manufactured articles inflation came in at 2.67 per cent in October as against 2.48 per cent in the previous month. Aditi Nayar, Senior Economist. ICRA, said that CPI inflation for October printed in line with expectations, with the dip in food inflation benefiting from a favourable base effect, which brought inflation for pulses to single digits after a gap of 20 months.
Although inflation has declined both at the retail and wholesale level in October, the trends revealed by the second quarter GDP growth figures to be released in a fortnight would also influence the monetary policy action in December 2016.
Rishi Shah, Economist, Deloitte in India, said, “Overall, we expect inflationary pressures to remain capped in the near term on account of a further downward bias from the move to discontinue notes of higher denominations.”
srivats.kr@thehindu,co,in
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