New Delhi, Jan 15: India’s wholesale price-based inflation declined to 6.16 percent in December, the lowest in five months, on the back of slower rise in food prices, government data showed Wednesday.
The country’s main inflation measure based on the Wholesale Price Index (WPI) was 7.31 percent in the corresponding month of previous year.
The inflation was recorded at 7.52 percent in November 2013, the highest level in 14 months largely to a sharp jump in food and vegetables prices.
According to data released by the ministry of commerce and industry here, prices of food articles increased by 13.68 percent in December year-on-year. This is sharply lower than 19.93 percent jump registered in the previous month.
Prices of vegetables were 57.33 percent higher during the month under review year-on-year, while potato became costlier by 54.65 percent and onion price jumped by 39.56 percent. However, increase in prices of these articles was much sharper in November.
Retail inflation has also eased in December, helped by slower rise in food prices.
The Consumer Price Index (CPI) based retail inflation declined to 9.87 percent in December from 11.16 percent in the previous month, according to latest data released by the Central Statistics Office (CSO) Monday.
In retail markets, vegetables prices grew at a slower rate of 38.76 percent in December year-on-year as compared to 61.6 percent jump in the previous month.
Based on WPI index, fuel and power inflation was recorded at 10.98 percent in December.
Inflation of manufactured goods, that has 64.97 percent weight in WPI, was recorded at 2.64 percent during the month under review.
With softening in retail as well as wholesale price based inflation, industry demanded that the central bank should cut policy rates during its review later this month.
“We hope the RBI will consider a downward revision in policy rates later this month,” said Sidharth Birla, president of industry body FICCI.
Birla pointed out that food inflation was high largely due to supply side factors and the government policies would help address the shortages so that food inflation further softens in the months ahead.
“As for manufactured goods inflation, this is certainly on the lower side and with industrial production limping,” he said.
The Confederation of Indian Industry (CII) also emphasised on the need for easing in central bank’s monetary policy.
“The easing of inflation at a time when industrial growth continues to be in the red should induce RBI to review its monetary policy stance and cut its policy rates to rejuvenate growth, which has been hit by high interest costs, flagging investments and subdued demand,” CII said in a statement.