New Delhi: Giving fillip to the widespread calls for a rate cut by the Reserve Bank, India’s wholesale price index (WPI) based inflation fell to 0.11 percent in December 2014 from 6.40 percent in the corresponding month of 2013, government data showed Wednesday.
The rate of inflation based on WPI was nil for November from 1.77 percent for the previous month (October).
Data furnished by the commerce and industry ministry attributed the slowdown in WPI based inflation to slower increase in food and fuel prices.
Food inflation in the month under review eased to 5.20 percent from an increase of 13.73 percent recorded in the corresponding month of 2013.
Prices of major food articles like wheat, potatoes, onions, egg, fish and meat fell drastically.
According to the WPI data, wheat prices decelerated by 2.46 percent from a rise of 7.64 percent year-on-year. Potatoes prices came down from an increase of 56.78 percent in December 2013, to a negative 4.78 percent.
Onions prices contracted by 18.54 percent from an increase of 38.30 percent year-on-year. Egg, fish and meat inflation stood at 0.68 percent from a rise of 11.68 percent in December, 2013.
Fuel and power inflation declined to 7.82 percent from an appreciation of 10.87 percent during December, 2013.
The wholesale decline comes on the back of retail inflation falling to a low of five percent in December from 9.87 percent during the corresponding month of 2013.
The December retail inflation was, however, a rise over the record low of 4.4 percent CPI registered in November 2014.
The retail inflation rate recorded in November was the lowest since India started computing consumer price index (CPI) in January 2012.
December’s retail inflation increase came after fourth straight month of decline till November.
The current WPI and CPI data will boost India Inc.’s hope for a rate cut from the apex bank in its next monetary policy announcement.
The RBI has set a target for CPI inflation at 8 percent by January 2015 and 6 percent by January 2016.
It has retained the economy’s growth projection for current fiscal at 5.5 percent and said the future policy stance will be influenced by the inflation outlook.
Commenting on the data Jyotsna Suri, president, industry chamber FICCI said: “The WPI inflation for December 2014 at 0.11 percent is only a marginal rise over last month.To give a boost to the capex cycle, there is an urgent need for lowering of lending rates. Since inflation is largely under control, we urge the RBI to ease the monetary policy stance.”