New Delhi: Despite a steep rise in prices of pulses and onions, India’s annual inflation rate based on wholesale prices continued in the negative territory in August, falling to (-)4.95 percent, official data showed on Monday.
The wholesale prices had decelerated by (-)4.05 percent in July. The steep decline in August was mainly led by lower fuel prices.
The annual rate of inflation, as per the official wholesale price index, stood at 3.85 percent in the corresponding month of the previous year, according to data released by the commerce and industry ministry.
During the month under review, some commodities of mass consumption continued to upset household budgets and notably among them was onion prices, which were higher by as much as 65 percent over the like month of the previous year. Pulses were dearer by 36 percent.
Other protein rich food items such as milk, egg, meat and fish recorded modest price increases. On a year-on-year (YoY) basis milk was costly by 2.08 percent, while egg, meat and fish prices’ rose by 3.30 percent.
At the same time potatoes and vegetables were cheaper by 52 percent and 21 percent, respectively. Even the prices of cereals and rice dwindled. Cereals cost depreciated by 1.65 percent and rice cheapened by 3.48 percent.
Overall, food articles’ prices declined by 1.13 percent on a YoY basis.
Even under the manufactured products category, prices of commodities pertaining to food fell — especially sugar that was lower by 19 percent year-on-year,
Under fuels — the index for which was down 16.5 percent — petrol was cheaper by 13.26 percent and diesel by 24.54 percent. Cost of cooking gas receded by 5.32 percent.
The WPI and consumer price index (CPI) which will be released later in the day, assumes significance as these are last significant pointers towards Reserve Bank of India’s (RBI) rate decision.
India Inc. expects a better-than-expected WPI and CPI will drastically improve chances of a rate cut during RBI’s monetary policy review slated for September 29.
The markets too welcomed the strong macro numbers, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange, gained 172 points or 0.67 percent (1.10 p.m.), just an hour after the release of the data.
The WPI and CPI indicators are also important, as they will give domestic guidance to the capital markets, just before the US Fed’s Federal Open Market Committee (FOMC) meet on September 16-17.
The US Fed will decide during the FOMC meeting whether or not to raise interest rates.