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Inflation edges up at (-)3.81pc in October; pulses, onion expensive

Deflationary trend continued for the 12th month in a row with WPI inflation at (-)3.81 per cent in October, mainly on account of subdued prices of food items although pulses and onion turned costlier.

Inflation based on Wholesale Price Index has been in the negative zone since November last year. It was (-)4.54 per cent in September. In October last year, it was 1.66 per cent.

Pulses and Onion among the food items category turned costlier with inflation at 52.98 per cent and 85.66 per cent respectively during October.

Despite the sharp rise in prices of various pulses and the concerns generated by the unfavourable monsoon, overall food inflation remained muted in October, ICRA Senior Economist Aditi Nayar said.

The rate of price rise in case of vegetables was at 2.56 per cent as against (-)19.37 per cent in the same month last year, as per official data released today.

Besides pulses and onion, the food items which became dearer in October were milk (1.75 per cent) and wheat (4.68 per cent). However, inflation rate in case of potato was in the negative zone, (-)58.95 per cent.

Inflation rate in fuel and power segment was (-)16.32 per cent, while that in manufactured products was (-)1.67 per cent in October.

The Reserve Bank would take into account WPI number for October while deciding on the key interest rate in its December 1 monetary policy review.

Most of the analysts feel that RBI is unlikely to cut the rate in its upcoming policy review.

RBI mostly tracks the Consumer Price Index-based retail inflation for its monetary policy decisions.

Rising for the third straight month, retail inflation has climbed to 5 per cent in October, as against 4.62 per cent in the same month a year ago due to costlier pulses and other food items.

Industry bodies said inflation may go up in the coming month due to rise in fuel prices and its impact on manufacturing.

Further excise tax hike on petrol and diesel and cess imposition on services put together are likely to put an upward pressure on the November WPI, Assocham said.

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