New Delhi, Nov 14 : Despite a rise in overall food prices, India's annual rate of inflation based on wholesale prices eased to 0.16 per cent in October from 0.33 per cent in September due to lower cost of key transportation fuels and manufactured products.
Similarly, on a year-on-year (YoY) basis, the Wholesale Price Index (WPI) data furnished by the Ministry of Commerce and Industry showed a decelerating trend, as inflation had risen to 5.54 per cent during the corresponding period of 2018.
"Build up inflation rate in the financial year so far was 1.92 per cent compared to a build up rate of 4.90 per cent in the corresponding period of the previous year," the Ministry said in its review of "Index Numbers of Wholesale Price in India" for October.
On a sequential basis, the expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, increased to 6.41 per cent from 5.54 per cent.
The prices of food items increased at a faster rate of 9.80 per cent from 7.47 per cent.
However, the cost of fuel and power, which commands 13.15 per cent weightage, deflated by (-)8.27 per cent from a decline of (-)7.05 per cent.
Expenses on manufactured products registered a decline of (-)0.84 per cent in October from (-)0.42 per cent in September.
On a YoY basis, expenses on primary articles, which constitute 22.62 per cent of the WPI's total weightage, increased to 6.41 per cent from a rise of 2.46 per cent in September last year.
The YoY prices of food items increased YoY at a faster rate of 9.80 per cent from (-)1.42 per cent.
Onion price increased by 119.84 per cent while it was at (-)31.69 per cent during the corresponding period of last fiscal.
Overall, vegetable prices in October rose 38.91 per cent against the decline of (-)18.35 per cent in the same month a year ago.
The cost of the fuel and power category declined (-)8.27 per cent against a rise of 18.66 per cent YoY.
Furthermore, the cost of the manufactured products category declined (-)0.84 per cent against a rise of 4.57 per cent YoY.
"The fall in the WPI inflation in October 2019 was narrower than we expected, as a jump in food inflation to nearly 10 per cent, offset the further weakness in the core WPI," ICRA Principal Economist Aditi Nayar said.
"The sequential dip in the WPI inflation in October 2019 was led by core items, fuel and power, minerals, and crude petroleum and natural gas, whereas inflation for primary food and non-food articles, and manufactured food products recorded an uptick."
According to Edelweiss Securities' Economist Madhavi Arora, the present situation presents policy dilemma of overshooting inflation, undershooting growth and fragile fiscal state.
"We maintain the current growth-inflation mix has been favourable for counter-cyclical monetary stance. Despite meaningful upside risk to headline inflation, the MPC will likely stress on underlying inflation excluding the transient food shock and focus on tackling weaker growth dynamics as wide output gap continues to persist," she said.
"We see scope for further easing of at least 50 basis points in this cycle, admittedly contingent on evolution of inflation amid various domestic and global idiosyncrasies."
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