For the first time in the last 19 months, the rate of Wholesale Price Index-based Inflation has fallen below 10 percent. It remained above 10 percent for the last one and a half years. In September, it was 10.7 percent. It was 13.83 percent in October last year. Fuel prices have eased due to a decline in WPI inflation in October. Fuel and electricity inflation was 32.61 percent in September. It fell to 23.17 percent in October.
Inflation rate of products
In September, the inflation rate of manufactured products was 6.34 percent. It has come down to 4.42 percent in October. Manufactured products account for about two-thirds of the WPI basket. Hence their price fall affects overall WPI inflation.
Food Inflation Rate
Foodgrain inflation has fallen to 6.48 percent from 8.08 percent. All commodity indices were up 0.3 percent month-on-month. It decreased steadily in July, August and September.
In the last three quarters, retail inflation has been above the RBI’s fixed range of 2-6 percent. From this it has been determined that RBI has failed to control inflation. It will be a comfort to the Reserve Bank and the government if the retail inflation figure also remains low in October after the wholesale price index inflation rate eased.
Interest rate hike strategy?
However, this will not have much impact on RBI’s policy. It has been continuously raising interest rates to bring inflation under control. The central bank is also expected to increase the repo rate in next month’s monetary policy. RBI has increased the repo rate by 1.90 percent since May this year. This has increased it to 5.9 percent.
The Monetary Policy Committee of the RBI will meet on the 5th of next month. It will run till December 7. RBI Governor Shaktikanta Das will announce the committee’s decision on December 7.