WPI-based inflation plunges to historic low of (-)4.95%

Deflationary trends continued for the 10th month in a row with inflation plunging to a historic low of (-)4.95% in August on cheaper fuel and vegetables, putting pressure on RBI to cut interest rate.

Deflationary trends continued for the 10th month in a row with inflation plunging to a historic low of (-)4.95% in August on cheaper fuel and vegetables, putting pressure on RBI to cut interest rate.

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The Wholesale Price Index-based inflation was (-)4.05% in July. It has been in the negative zone since November 2014.

In August 2014, inflation was 3.85%. However, onion and pulses were costlier with inflation at 65.29% and 36.40% respectively during August, as per official data released on Monday.

Overall, food basket inflation remained in negative territory for second month in a row at (-)1.13%. For vegetables, it declined to (-)21.21%, helped by potato at (-)51.71%.

Inflation rate in fuel and power segment was (-)16.50%, while that in manufactured products was (-)1.92% in August.

Besides pulses and onion, the food items which became dearer in August are eggs, meat and fish (3.30%), milk (2.08%) and wheat (2.05%).

The inflation data for June has been revised to (-)2.13%, as compared to provisional estimates of (-)2.40%.

The Reserve Bank mostly tracks the Consumer Price Index-based inflation for its policy decision, and its next review is due on September 29.

The CPI or retail inflation data is expected later in the day. In July, it was recorded at a low of 3.78%.

As RBI wanted more clarity over inflation numbers in the months to come, it kept the key rate unchanged in its monetary policy review on August 4.