WPI inflation eases to 3.39 per cent in October as food prices soften

The wholesale inflation witnessed a second consecutive month of decline with the WPI easing to 3.39 per cent in October. Softening of food articles prices,led by vegetables led to decline in wholesale inflation.

The wholesale price-based inflation, reflecting the annual rate of price rise, in September stood at 3.57 percent. In October 2015, WPI inflation was (-)3.70 per cent.

Wholesale Price Index (WPI) inflation in vegetables witnessed deflationary pressures and was recorded at (-) 9.97per cent in October. Inflation in this category had scaled ahigh of 28.45 per cent in July.

This was aided by inflation data for onion, which was at(-)65.97 per cent. Pulses inflation continued to rule high at 21.80 per centin October, according to the Commerce Ministry data.

Potato, a daily consumable vegetable, witnessed maximum inflationary pressure at 60.58 per cent. Inflation in fruitsrose 6.45 per cent during the month.

Overall, the food inflation basket showed moderation withinflation at 4.34 per cent in October, as against 5.75 percent in September.
The inflation print for manufactured articles read at2.67 per cent in October compared to 2.48 per cent in theprevious month.

The rate of inflation in sugar was at 29.63 per cent andthat for petrol was 3.57 per cent.

The WPI inflation for August has been revised upward at3.85 per cent against provisional estimate of 3.74 per cent. Data for October retail inflation is expected later in the day.

The all-powerful Monetary Policy Committee headed by RBI Governor Urjit Patel last month cut benchmark interest ratesby 0.25 per cent to 6.25 per cent.

While he had signalled more tolerance towards inflation,the easing in CPI data was in line with the RBI's forecast foraverage 5 per cent inflation in fourth quarter of 2016. This,many expect, would create more room for interest rate cuts.