Wholesale price inflation at a 5-year low of 1.77% in October

India's annual rate of inflation based on the wholesale price index (WPI) stood at a five-year low of 1.77 per cent in October 2014, helped by softening prices of fuel and food items, provisional figures released by the Central Statistics Office (CSO) today showed.

WPI inflation, with its base (2004-05 = 100) stood at 2.38 per cent in the previous month and at 7.24 per cent during the corresponding month of the previous year.

Build-up of inflation rate so far during the financial year was lower at 2.00 per cent in October 2014, compared to a build-up rate of 6.23 per cent in the corresponding period of the previous year. The WPI inflation has fallen for the fifth month in a row.

This combined with a slowing of retail inflation to a record low of 5.52 per cent in October raised hopes of a rate cut by the Reserve Bank of India next month to boost economic growth.

As per official data released today, food inflation fell to a nearly two-and-half-year low of 2.7 per cent. Food inflation has been on the decline since May while fuel prices have fallen on the back of low crude prices in the international markets.

The index for the `primary articles' group, which has a weight of 29.12 per cent in the wholesale price index (WPI) declined by 1.2 per cent year-on-year in October 2014.

Within the group, the index for the `food articles` group declined by 1.3 per cent due to lower price of fruits and vegetables, urad, bajra, maize and gram and jowar, ragi, condiments and spices and fish (marine). However, the price of fish (freshwater), tea, egg and barley and meat moved up.

The index for the non-food articles` group declined by 2 per cent due to lower price of soyabean, raw cotton, copra (coconut), guar seed, raw silk and groundnut seed and coir fibre, cotton seed and safflower (kardi seed). However, the price of flowers, raw jute and castor seed, linseed and fodder and mesta and rape and mustard seed moved up.

The index for the `minerals` group rose 0.2 per cent in October 2014 due to higher price of barytes, copper ore and iron ore. However, the price of chromite and zinc concentrate, crude petroleum and manganese ore declined.

The index for the `fuel and power' group, which has a weight of 14.91 per cent in WPI, declined by 1.3 per cent due to lower price of furnace oil, aviation turbine fuel, petrol and bitumen, kerosene and high speed diesel.  However, the price of lubricants moved up.

The index for the `manufacturing products' group, which has the highest weight of  64.97 per cent in the WPI, remained unchanged at its previous month's level.

Within the group, the index for the `food products` group declined by 0.5 per cent due to lower price of processed prawn, bakery products and tea leaf (unblended), tea leaf (blended) and tea dust (unblended), sunflower oil and gur and oil cakes, vanaspati, sugar and palm oil. However, the prices of sugar confectionary, milk powder, tea dust (blended) and ghee, cotton seed oil, mixed spices and wheat flour moved up.

The index for the `beverages, tobacco and tobacco products` group rose 0.3 per cent due to higher price of rectified spirit and soft drinks and carbonated water.

The index for the `textiles` group declined by 0.6 per cent due to lower price of cotton yarn and jute sacking cloth, jute sacking bag and manmade fibre. However, the price of gunny and hessian cloth moved up.

The index for the `wood and wood products` group rose 0.1 per cent due to higher price of veneered particle board.

The index for the `paper and paper products` group rose 0.3 per cent due to higher price of  newsprint and books/periodicals/journals.

The index for the `leather and leather products` group declined by 0.7 per cent due to lower price of leather footwear.

The index for the `rubber and plastic products` group declined by 0.1 per cent due to lower price of HDPE bag and plastic/PVC chappals. However, the prices of plastic rolls and HDPE woven sacks, polyester film and plastic/PVC shoes moved up.

The index for the `chemicals and chemical products` group rose 0.1 per cent due to higher price of adhesive and  gum and synthetic resin and ayurvedic medicines, non-cyclic compound, dye and dye intermediates, photographic goods, explosives, ammonium sulphate and antacid and  digestive preparations. However, the price of basic organic chemicals, rubber chemicals and washing soap declined.

The index for the `non-metallic mineral products` group rose 1.4 per cent due to higher price of marbles, bricks and tiles and white cement, glass bottles and bottleware and lime and slag cement. However, the price of asbestos corrugated sheet declined.

The index for the `basic metals, alloys and metal products` group rose 0.4 per cent due to higher price of metal containers, CRC, rounds and angles and GP/GC sheets, aluminium, billets, pencil  ingots, wire rods, pig iron, sponge iron and joist and beams. However, the price of steel rods, copper/copper ingots, melting scrap, sheets, copper wire (all types) and silver declined.

The index for the `machinery and machine tools` group rose 0.2 per cent due to higher price of UPS /stabilizer, heat exchangers, electric switches, engines and chemical plant equipments and PVC insulated cable. However, the price of electric motors and ball/roller bearing, compressors and pump and assembly declined.

Based on the final wholesale price index for 'all commodities', the CSO also revised the WPI inflation rate for August 2014 to 3.85 per cent from 3.74 per cent reported earlier.