October WPI inflation at -3.81% versus -4.54% in September

However, inflation rate in case of potato was in the negative zone, (-)58.95 per cent.

Wholesale Price Index (WPI) inflation for the month of October was reported at (-)3.81% vs (-)4.54% in September. Carrying a 39.1% weight in the CPI, food inflation is down to 4.1% so far this fiscal compared with 7.6% in the same period last fiscal. After witnessing strong gains for a year, particularly in 4Q14 and 1Q15, inflation in this component (mostly comprised of rents) appears to have peaked and we may see it continue to soften in the months ahead.

“Such high inflation rate in pulses is undesirable for a country where pulses are second most important part of diet after cereals and an average Indian spends almost 5% of his food expenditure on pulses”, Crisil said in a note highlighting the need for the authorities to address the factors limiting supply of pulses.

“The index for non-food articles group rose by 0.2% to 220.7 (provisional) from 220.2 (provisional) for the previous month due to higher price of soyabean (14%), raw jute (8%), cotton seed (6%), rape & mustard seed and flowers (4% each) and raw rubber and fodder (2% each)”, the government data said.

During the month under review, a few commodities of mass consumption continued to upset household budgets and notable among them was onion, whose price was higher by as much as 86 percent over the like month of the previous year.

The wholesale fuel prices fell 16.32 per cent from a year ago in October, while prices of manufactured goods declined 1.67 per cent year on year.

The government has already initiated the process of increasing supplies by importing onions and pulses, which are set to flood the market soon. “CPI inflation is now being driven entirely by a narrative called “pulflation”, he said in a note.

In September, RBI cut policy rates by a surprise 50 bps to stimulate the economy even as inflation was at record low.

RBI has cut rates thrice by a total 125 bps in 2015 as inflation slowed. India meets 60 per cent of its annual vegetable oil demand of 17-18 million tonnes through imports.