Inflation Declines to 7.45 Percent in Oct Despite Rise in Food Items

Bangalore: Inflation declined marginally to 7.45 percent in October even though prices of food items like rice, wheat pulses and potato showed a rise giving virtually no respite to the common man battling price rise.

Inflation, as measured by the Wholesale Price Index (WPI), was 7.81 per cent in September. In October last year, it stood at a high of 9.87 per cent.

However, the moderation in the price rise comes amidst a string of disappointing economic data released on Monday. These included contraction in industrial output, and decline in exports along with rise in retail inflation which dampened hopes of early economic revival.

Experts believe that stubborn inflation may not prompt the Reserve Bank to reduce lending rate in the upcoming mid-quarter review of the monetary policy on December 18.

"Inflation is still sticky at above 7 per cent. This does not provide sufficient comfort for the RBI to lower the interest rate," said Rajiv Kumar, economist and former director of the Indian Council for Research on International Economic Relations (ICRIER).

There is still need to improve the supply side problems, he said.

India Inc is of the view that the decline in the rate of price rise should encourage RBI to cut interest rate that will lead to uptick in industrial activity.

"The inflation numbers are showing signs of moderation with figure coming down from 8 per cent in August 2012 to 7.81 per cent in September 2012 and further down to 7.45 per cent in October 2012. This should encourage RBI to fine tune the monetary policy with the view to bolster growth, particularly, that of the manufacturing sector," Ficci President R V Kanoria said.