India's headline annual inflation rate for all commodities, based on the new series of WPI (Wholesale Price Index), for the month of November declined to 7.24 percent from the preceding month's 7.45 percent, due to lower prices of onion and some manufactured products, potato and wheat, prompting the Reserve Bank of India (RBI) to keep the interest rate unchanged in its policy review next week.
Wednesday, government data showed India's industrial output (IIP) grew by 8.2 percent from a year earlier in October, weakening the chances of a rate cut next week.
The rate of inflation was, however, lower than the 9.46 percent reported in the corresponding month last year, data say.
As per the official data released on Friday, inflation in food items stood at 8.50 percent in November, compared to 6.62 percent in October.
During the month under review, milk turned cheaper by 6.18 percent and fruits by 7.32 percent. However, the rates of potato rose by 72.20 percent and wheat, pulses, onion and cereals by 23.19 percent, 19.10 percent, 17.00 percent and 15.85 percent, respectively.
Build-up inflation during the current fiscal so far fell to 4.84 percent from 5.28 percent in the corresponding period last year, the data showed.
Going by provisional figures, the WPI for 'all commodities' for November rose by 0.1 percent to 168.8 from its previous month's level of 168.7.
Final annual rate of inflation for September (based on the 2004-05 base year) revised upward to 8.07 from the earlier provisional figure of 7.81 percent.
Index for the 'Primary Articles' group increased by 0.27 percent from the preceding month of October.
The groups and items for which the index showed variations during the month were:
Index for 'Food Articles' group rose by 0.33 percent from the previous month, due to higher prices of ragi, bajra, barley, wheat, fish-inland, gram, fruits & vegetables. However, the prices of chicken, coffee, urad, tea and arhar dropped.
Index under the 'Non-Food Articles' category grew by 1.82 percent from October, on higher prices of flowers, soyabean, groundnut seed, mustardseed, copra, sunflower, raw cotton and coir fibre, while those of nigerseed, raw rubber, raw jute, raw silk and gingellyseed declined.
Index under the 'Minerals' category fell by 2.45 percent, due to dip in the prices of copper ore, sillimanite, barytes, crude petroleum, bauxite, and steatite, whereas those of magnesite, zinc concentrate, gypsum and limestone moved up.
Index for fuel, power, light and lubricants decreased by 0.58 percent from the previous month, due to lower prices of bitumen, furnace oil, naphtha, light diesel oil, petrol and aviation fuel. However, the prices of LPG increased.
Manufactured Products such as tea dust, sooji, oil cakes, wheat flour, dried tobacco, rectified spirit, woolen textiles, jute yarn, insulation board, rubber transmission belt organic manure, glass bottle, sponge ion, bus and truck pushed p the index for 'Manufactured Products' to 0.07 percent
However, prices of gur, khandsari, palm oil, sugar, zarda, paper cartons/boxes, leather footwear, chlorine, castor oil, basic organic chemicals, grey cement, bricks & tiles, steel rods, gp/gc sheets, angle and bicycles reduced.
The RBI expects inflation to moderate further in the next two-three months that may lead to a cut in interest rates by the apex bank, Deputy Governor K. C. Chakrabarty said.
On the possibility of RBI reducing policy rates in its mid-quarter policy review on December 18, he said, the repo rate would come down when inflation comes down.
In its last policy review in October, the apex bank left the repo rate unchanged. However, it reduced the cash reserve ratio (CRR) by 0.25 percent, leading to the injection of additional liquidity of Rs.17,500 crore in the banking system.
by RTT Staff Writer
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