New Delhi, Nov 14 India’s inflation rate, based on the Wholesale Price Index (WPI), rose to 2.36% in October this year, compared to the same month of the previous year on the back of higher food prices, figures released by the Commerce and Industry Ministry on Thursday showed.
Inflation in October has risen from 1.84 per cent in September, primarily due to an increase in prices of food articles which jumped by 13.57 per cent during the month as vegetables such as potatoes and onions turned costlier following the damage to crops caused by the late withdrawal of the monsoon.
The wholesale price inflation in manufactured goods, which have a weightage of over 64 per cent in the index, rose by 1.5 per cent. There was a decline in prices in the fuel and power category with the inflation rate at a negative (-) 5.79 per cent, according to the official figures.
Data released on Tuesday showed the country’s retail price inflation based on the Consumer Price Index (CPI) rose to 6.21 per cent in October as higher prices of food items such as vegetables spiked during the month. Retail inflation has increased from 5.49 per cent recorded in September as the prices of vegetables surged by as much as 42.18 per cent in October as the late withdrawal of the monsoon this year resulted in damage to crops and reduced supply in the market.
This is the first time that the rate of retail inflation has crossed the RBI’s upper limit of 6 per cent. The RBI is waiting for the retail inflation to come down to 4 per cent before it can go in for an interest rate cut to propel growth.
Reserve Bank Governor Shaktikanta Das said last week that although the RBI had shifted towards a softer neutral monetary policy stance to spur growth, this did not mean that an interest rate cut would happen immediately.
Addressing a media event, the RBI Governor said: "A change in stance doesn't mean there will be a rate cut in the very next monetary policy meeting."
He said there were still significant upside risks to inflation and "a rate cut at this stage would be very risky".
The RBI at its monetary policy review kept interest rates unchanged for the 10th straight meeting, but switched its monetary policy stance to "neutral" from "withdrawal of accommodation". This had led to speculation that the way had been paved for an interest rate cut.
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