Owing to a fall in prices of food, manufactured items and fuel, Wholesale Price
Inflation (WPI) hit a zero level in November. This is the lowest in five-and-half year period.
In November 2013, the Wholesale Price Index based inflation was at 1.77% in October and 7.52% in November 2013.
The
food inflation slumped to nearly three-year-low of 0.63%, according to a data released by the government. Since July 2009, when the WPI was (-)0.3%, this is probably the first time the inflation has hit zero level.
If one has noticed the trend, food inflation is on decline since May this year. In October, onion price reduced 56.28% as against a contraction of 59.77%. In November, prices of protein-rich items escalated to 4.36%. On the other hand, inflation in potato remained at 34.10% during the same period.
In November, the sharp drop in WPI inflation came at the back of
retail inflation declining to a record low of 4.38%. The decline in both retail and WPI inflation will put pressure on the Reserve
Bank of India (RBI) to lower
interest rates to boost growth. Since January, the apex bank of the country has maintained a status quo in
interest rate. While framing its monetary policy, the apex bank of India considers retail inflation.
On several occasions,
Finance Minister Arun Jaitley too had nudged the Reserve Bank of India to slash rates. Also,
RBI governor Raghuram Rajan has clarified that interest rate cut by itself would not bring a boost to the
Indian economy.
This fiscal, the Indian
economy is estimated to grow in the range of 5.4-5.9%.
(Image: The Economic Times)
