NEW DELHI: Wholesale price inflation hit a zero level in November, the lowest in about five and half years, on account of decline in prices of food, fuel and manufactured items.
The Wholesale Price Index (WPI) based inflation was at 1.77Percent in October and 7.52 Percent in November 2013. As per data released by the government, the food inflation fell to nearly three year low of 0.63 Percent. Food inflation is on decline since May.
This is probably the first time when WPI inflation has hit exact zero level. The last time WPI was lower than this was (-)0.3 Percent in July 2009.
Onion price contracted 56.28 Percent as compared to a contraction of 59.77 Percent in October. In case of vegetables, the contraction was 28.57 Percent. However, prices of protein rich items of egg, meat and fish rose during November at 4.36 Percent, while inflation in potato stood at 34.10 Percent.
Inflation in manufactured products, like sugar, edible oils, beverages and cement, fell to 2.04 Percent in November as against 2.43 Percent in the previous month.
Prices in fuel and power segment contracted by 4.91 Percent, as against 0.43 Percent inflation in October.
The sharp drop in WPI inflation, which fell for the sixth month in a row, came at the back of retail inflation declining to a record low of 4.38 Percent in November.
The decline in both retail and WPI inflation for November coupled with contraction of industrial production to 4.2 Percent in October, will put pressure on RBI to lower interest rates to boost growth.
The Reserve Bank has maintained a status quo in interest rate since January. The RBI factors in retail inflation while formulating its monetary policy.
Finance minister Arun Jaitley too on several occasions had nudged the RBI to cut rates. The issue also figured during a debate in the Lok Sabha last week.
RBI governor Raghuram Rajan has emphasised that interest rate cut by it would not lift the economy. Industry has been demanding easing of interest rates to boost growth, which has slumped to 4.7 Percent in 2013-14. The economy is estimated to grow in the range of 5.4-5.9 Percent this fiscal.
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