Declining prices of global crude oil kept the inflation rate at near zero level in December, raising the clamour for interest rate cut by RBI to boost domestic manufacturing and spur economic growth.
Wholesale price index (WPI) based inflation moved up marginally in December to 0.11 per cent from zero level in November, reversing the six month declining trend.
The slight increase in inflation rate was due to spurt in ‘food items’ basket. Food inflation in December moved to 5-month high of 5.2 per cent, as per the government data released today.
While inflation in pulses, vegetables and fruits was higher in December over the previous month, it eased in wheat, milk and other protein rich items like egg, meat and fish.
“To give a boost to the capex cycle, there is an urgent need for lowering of lending rates. Since the inflation is largely under control, we urge the RBI to ease the monetary policy stance,” industry body Ficci’s President Jyotsna Suri said.
The data showed inflation in fuel and power segment contracted sharply by 7.82 per cent, as against 4.91per cent in November.
The Reserve Bank, which has kept key interest (repo) rate unchanged at 8 per cent, is scheduled to announce its next monetary policy on February 3.
Global oil prices have slumped to near 6-year low of around $46 a barrel helping importing countries like India to cut back on their dollar payments as well as ease retail prices, which in turn calm inflation.
The retail inflation measured on consumer price index (CPI) for December too had inched up to 5 per cent while it was 4.38 per cent in November.
The data further revealed that the inflation in the primary articles segment shot up to 2.17 per cent in December, as against a decline of 0.98 per cent in November.
CII Director General Chandrajit Banerjee said the industry body hopes that the “conducive inflationary situation” would spur RBI to move away from its inflation- centric approach to “policy making and focus on rejuvenating growth in the economy and industry, in its forthcoming monetary policy”.
The WPI inflation was on the decline since June before it inched up marginally in December.
The rate of price rise was also slower at 1.57% in December as compared to 2.04% in previous month.
