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Inflation rises to -0.73% in December on costlier food items

Deflationary trend eased in December with WPI inflation moving up to (-)0.73% as food articles, mainly vegetables, turned costlier.

The Wholesale Price Index-based inflation has been rising for the last four months and was (-)1.99% in November.

In December 2014, it was (-)0.50%. This is the 14th straight month since November 2014 when the wholesale inflation has remained in the negative zone.

Food inflation, however, shot up to 8.17% in December as against 5.20% in the previous month. Inflation in pulses and onion stood at 55.64% and 25.98%, respectively. The rate of price rise in case of vegetables was 20.56% December and for fruits it was 0.76%.

Inflation in fuel and power segment was (-)9.15% and for manufactured products it was (-)1.36% in December. Inflation for October has been revised to (-)3.70% from the provisional estimate of (-)3.81%.

Reserve Bank may face pressure to reduce the key lending rate further as industrial production contracted by 3.2% in November, its sharpest decline in four years.

Governor Raghuram Rajan had said the bank will carefully look into the latest data on industrial production, and come out with a “reasoned response.” Besides IIP, the central bank also looks into retail inflation data while firming up its monetary policy stance.

Retail inflation has been rising for five straight months and stood at 5.61% in December. RBI’s next bimonthly policy review will be unveiled on February 2.

SOurce: ISMW