New Delhi: Wholesale prices fell the most in five-and-a-half years in January as decline in oil and some food items resulted in a negative inflation or deflation of 0.39 percent for the month, raising hopes of rate cut by RBI.
This is the second time in three months that the wholesale price index has entered negative territory, as the government Monday also revised downwards the inflation number for November to minus 0.17 percent, from zero earlier.
Inflation measured on wholesale price index (WPI) was at 0.11 percent in December.
Although the prices of certain protein rich items and wheat declined during the month, the overall food inflation was at a six month high of 8 percent, as per the government data released today.
The last time the inflation had touched this low level was in June 2009 when it was at (-)0.4 percent.
RBI Governor Raghuram Rajan on January 15 cut interest rates ahead of the scheduled monetary policy review and it is expected that he might announce another cut after the Budget in the wake of significant improvement in the inflation situation. The next review is due on April 7.
Inflation in 'fuel and power segment' was negative at (-) 10.69 percent in January, while in manufactured products it was at 1.05 percent.
The contraction in WPI inflation for petrol was steeper at 17.08 percent in January from 11.96 percent in December. Similarly, the rate of decline in diesel prices last month was higher than in the previous month.
"Given the continuing trend of moderate inflation both at the wholesale and retail level and the fact that a durable recovery in the industrial sector is out of sight, we hope that the central bank would continue with the policy rate cut cycle after the forthcoming budget," FICCI President Jyotsna Suri said.
