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Inflation Falls To Zero

DECEMBER 15, 2014

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Inflation Falls To Zero

 Inflation Falls To Zero

The headline wholesale inflation touched the zero level last month, which is the lowest figure in about five and half years. The declining trend is visible on account of decline in prices of food, fuel and manufactured items.The Wholesale Price Index (WPI) inflation was at 1.77 % in October and 7.52 % in November 2013. This is probably the first time when WPI inflation has hit the exact zero level. The last time when the WPI was lower than this was (-) 0.3 % in July 2009.


The onion prices fell by 56.28 % as compared to the October figure of 59.77% fall. In case of vegetables, the contraction was 28.57 %. However, the prices of egg, meat and fish rose during November at 4.36 %, while inflation in potato stood at 34.1 %. Inflation in sugar, edible oils, beverages and cement fell to 2.04 % in November as against 2.43 % in the previous month. The prices in fuel and power segment contracted by 4.91 %, as against 0.43 % inflation in the month of October.

The sharp drop in WPI inflation, which has fallen for sixth months in succession, comes on the back of declining retail inflation, which has touched a record low of 4.38 % in November.The decline in both retail and WPI inflation will put pressure on the RBI for lower interest rates to boost growth. So fra, the Reserve Bank of India has maintained a status quo in interest rates since January 2014. The industry has also been demanding an easing of interest rates to boost economic growth, which has slumped to 4.7 % in 2013-14. The economy is estimated to grow in the range of 5.4-5.9 % this fiscal year.


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