Inflation Inches Up In December

WPI Inflation Eases
  • Wholesale inflation inched up to 0.11 per cent in December from zero per cent in November on the back of a surge in food prices
  • This phenomenon raised hopes of a rate cut by the Reserve Bank of India in its next Monetary Policy Review which is scheduled to be held on February 3.
  • Wholesale inflation in food, shot up to 5.2 per cent, a five-month high.
  • It was 0.63 per cent in November.
  • Inflation in pulses, vegetables and fruits was higher in December over the previous month.
  • The rise in food prices is attributed to the increase in prices in vegetables, fruits, pulses, onion and potatoes.
  • Inflation is measured by the wholesale price index (WPI)
  • WPI has been on the decline since June.
  • The sub-1 per cent WPI inflation figure soon comes after the latest retail inflation data, released on 12.01.2015, at 5 per cent, too showed a marginal increase,and yet remained below expectations.
  • With global crude now below $50 a barrel, fuel inflation continued to fall.
  • Wholesale inflation for fuel fell to minus 7.82 per cent in December against minus 4.91 per cent in November.
  • Commenting on the WPI inflation, Confederation of Indian Industry Director-General Chandrajit Banerjee said that the December figure was much more favourable than anticipated.
  • Chandrajit Banerjee added:  The CII hopes that the conducive inflationary situation would spur the RBI to move away from its inflation-centric approach to policy making and focus on rejuvenating growth in the economy and industry, in its forthcoming monetary policy
  • “India can draw some comfort from the sharp drop in oil prices, which is reflected in the drop in fuel-led inflation by 7.8 per cent.
  • Further, the manufacturing recovery in November, 2014, comes over a low base, and we are not yet sure about a firm turnaround.
  • To give a boost to the capex cycle, there is an urgent need for lowering of lending rates.
  • FICCI President Jyotsna Suri said: Since inflation is largely under control, we urge the Reserve Bank to ease the monetary policy stance.