Deflationary trend continued for the 10th month in a row with inflation plunging to a historic low of (-)4.95% in August on cheaper fuel and vegetables, putting pressure on RBI to cut interest rate. The Wholesale Price Index-based inflation was (-)4.05% in July. It has been in the negative zone since November 2014. In August 2014, inflation was 3.85%.
However, onion and pulses turned costlier with inflation at 65.29% and 36.40% respectively during August, as per official data released on Monday. Overall, the food basket inflation remained in negative territory for second month in a row at (-)1.13%. For vegetables, it declined to (-)21.21%, helped by potato at (-)51.71%.
Inflation rate in fuel and power segment was (-)16.50%, while that in manufactured products was (-)1.92% in August. Besides pulses and onion, the food items which became dearer in August are eggs, meat and fish (3.30 per cent), milk (2.08%) and wheat (2.05%).
The inflation data for June has been revised to (-)2.13%, as compared to provisional estimates of (-)2.40%. The Reserve Bank mostly tracks the Consumer Price Index-based inflation for its policy decision, and its next review is due on September 29.
