 "A labourer carries a sack of onions at a vegetable market in Kolkata")
Stakeholders' call for interest rate cut got sharper on Monday with the official data on wholesale and retail price indices indicating a further decline in their annual inflation rates for August, at (-)4.95% and 3.66%, respectively.
Even as prices of onions and pulses continued to hit household budgets, vegetables got cheaper, as per official data on wholesale price index (WPI) and the consumer price index (CPI) released by the commerce ministry and the Central Statistics Office, respectively.
The latest data showed that the annual food inflation, as per the retail data, increased to 2.2% from 2.15% in July. This apart, the general inflation for rural India also rose from 4.35% to 4.47%, while for urban areas it fell a tad from 2.94% to 2.67%.
In the case of wholesale index, prices continued in the negative territory during the last month. The WPI fell to (-)4.95% from (-)4.05% in July. The steep decline in August was mainly led by lower fuel prices.
The annual rate of inflation, as per the official wholesale price index, stood at 3.85% in the corresponding month of the previous year, according to data released by the commerce and industry ministry.
During the month under review, some commodities of mass consumption continued to upset household budgets and notably among them was onion, whose prices were higher by as much as 65% over the like month of the previous year. Pulses were dearer by 36%.
Other protein-rich food items on the WPI such as milk, eggs, meat and fish recorded modest price increases. On a year-on-year (YoY) basis milk was costly by 2.08%, while eggs, meat and fish prices rose by 3.30%.
At the same time potatoes and vegetables were cheaper by 52% and 21%, respectively. Even the prices of cereals and rice dwindled. Cereals depreciated by 1.65% and rice cheapened by 3.48%.
Overall, WPI food articles' prices declined by 1.13% on a YoY basis.
Even under the manufactured products category, prices of commodities pertaining to food fell -- especially sugar that was lower by 19% year-on-year.
Under fuels -- the index for which was down 16.5% -- petrol was cheaper by 13.26% and diesel by 24.54%. Cost of cooking gas receded by 5.32%.
The story was similar at the retail inflation level. The CPI showed an acceleration in the prices of pluses (25.76), meat and fish (5.79), milk and milk based products (5.33), spices (8.37), oil and fast (3.06), egg (2.30) and cereals (1.22).
Sugar and confectionery prices declined by 13.33 and so did of vegetables down 6.36% on a YoY basis.
However, prices of fuel and light under the CPI rose by 5.70%.
The fresh data comes against the backdrop of the Reserve Bank of India (RBI) scheduled to hold its 4th bi-monthly monetary policy review on Sep 29, that has kindled expectations of a cut in interest rates -- following a status quo during the previous update on Aug 10.
India Inc. has cautioned against the deflationary trend and urged the apex bank for an immediate cut in key lending rates.
"Indian industry continues to be under the grip of deflation. Price pressures are at a record low. The RBI needs to reduce interest rates sharply to drive a recovery in demand," said Chandrajit Banerjee, director general with Confederation of Indian Industry (CII).
The Federation of Indian Chambers of Commerce and Industry (Ficci) elaborated that though India remains a net importer of key commodities, the possibility of any immediate risk of importing inflation remains minimal.
"Under the present circumstances, it would be most appropriate for the RBI to give weight to growth considerations and announce a deeper cut in the policy rate," said Jyotsna Suri, president of Ficci.
The Associated Chambers of Commerce and Industry of India (Assocham) emphasised the need for supply-chain management of items like pulses, onions and others essential commodities.
"Impact of poor monsoon might reflect in the food prices, besides uneven rainfall may hit crops and could pile pressure on food inflation in the future," said Rana Kapoor, president of the Assocham.
The capital markets too welcomed the strong macro numbers, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange, closed 246.49 points or 0.96% up on Monday.
