India’s wholesale inflation remained in the negative terrain for the tenth straight
month in August 2015 at (-) 4.95% in spite of a sharp spine in onion and pulse’s prices resulting in practical measures by the
government to seize price rise.
The deepening of deflation in August could be explained by restrained global commodity and crude prices besides deflation in the core sector, a sign of weak demand in the economy. The descending prices of potato and other vegetables also contributed to the decline.
The wholesale price index fell 4.95% in August compared to a 4.05% decline in July, marking the tenth month of deflation, data released by the ministry of commerce and industry showed on Monday.
Food inflation, with over 14% weight in the index, remained in the deflationary zone for the second straight month at (-) 1.13% in August versus (-) 1.16% in the preceding month. Vegetables prices fell 21.21% in August versus 24.52% in July, marking the fifth straight month of deflation.
The price rise of onions zoomed up 65.29% in August from a year ago, compared to a negative 0.49% in July. Inflation in pulses rose to 36.4% during the month versus 35.75% in July. As pulse’s price shot up to Rs 155 per kg, the government has decided to import additional 5,000 tonnes of tur dal to make certain domestic supply. The government has also imported large amount of onions from Egypt and Afghanistan to enhance domestic availability.
The deflation in the core sector deepened during the month, suggestive of weak domestic demand. This may urge the RBI to cut rate for the fourth time in 2015 during the policy meet on September 29, 2015. RBI has cut rates thrice by 25 basis points each this calendar year thus taking the repo rate to 7.25%, from 8%.
Manufactured products’ inflation essentially considered by RBI for policy decisions fell further to 1.92% versus 1.47% in July 2015. The average wholesale inflation in 2014-15 was 2.1% against 6.0% in 2013-14. The deflation in fuel intensified further in August to 16.5% from 12.81% in the previous month. Oil prices have fallen by over 50% in the last one year. Brent crude prices stood as $48.59 per barrel on Friday, 1.5% lower than the previous day.
The deepening of deflation in August could be explained by restrained global commodity and crude prices besides deflation in the core sector, a sign of weak demand in the economy. The descending prices of potato and other vegetables also contributed to the decline.
The wholesale price index fell 4.95% in August compared to a 4.05% decline in July, marking the tenth month of deflation, data released by the ministry of commerce and industry showed on Monday.
Food inflation, with over 14% weight in the index, remained in the deflationary zone for the second straight month at (-) 1.13% in August versus (-) 1.16% in the preceding month. Vegetables prices fell 21.21% in August versus 24.52% in July, marking the fifth straight month of deflation.
The price rise of onions zoomed up 65.29% in August from a year ago, compared to a negative 0.49% in July. Inflation in pulses rose to 36.4% during the month versus 35.75% in July. As pulse’s price shot up to Rs 155 per kg, the government has decided to import additional 5,000 tonnes of tur dal to make certain domestic supply. The government has also imported large amount of onions from Egypt and Afghanistan to enhance domestic availability.
The deflation in the core sector deepened during the month, suggestive of weak domestic demand. This may urge the RBI to cut rate for the fourth time in 2015 during the policy meet on September 29, 2015. RBI has cut rates thrice by 25 basis points each this calendar year thus taking the repo rate to 7.25%, from 8%.
Manufactured products’ inflation essentially considered by RBI for policy decisions fell further to 1.92% versus 1.47% in July 2015. The average wholesale inflation in 2014-15 was 2.1% against 6.0% in 2013-14. The deflation in fuel intensified further in August to 16.5% from 12.81% in the previous month. Oil prices have fallen by over 50% in the last one year. Brent crude prices stood as $48.59 per barrel on Friday, 1.5% lower than the previous day.
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