Subdued food items post cash-crunch soften inflation to 3.15%

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Lower prices of vegetables and some kitchen staples, mainly on account of demand slump post demonetisation, pulled down wholesale to 3.15 per cent in November – the third straight month of decline.

Substantial decline in wholesale prices was witnessed in vegetables (-24.10 per cent), Onion (-51.51 per cent) andseeds (-5.05 per cent) last month.

Experts attributed the decline in vegetable prices to crunch following the of Rs 500 and Rs 1000 notes on November 9 and the inability of Reserveof to pump in required currency into the system.

The Wholesale Price Index (WPI) based inflation, reflecting the annual rate of price rise, was (-)2.04 per cent in November 2015.

In October this year, it was 3.39 per cent.

Prices of pulses however continued to rule high in the wholesale market at 21.73 per cent last month, as per the Commerce Ministry data.

Potatoes recorded maximum inflationary pressure at 36.97 per cent. in fruits rose to 2.45 per cent during the month.

Overall, the food basket showed moderation with at 1.54 per cent in November as against 4.34 per cent in October.

Industry chamber Assocham said the fall in is in tandem with the expectation which is reflective of the depressive state in the economy owing to the demonetisation.

“Boost to industry is required from both monetary and fiscal policy, i.E. Lowering of interest rates by RBI and reduction in tax rates by government in the coming budget to counter the effects of overall slowdown in economy,” it said.

ICRA Principal Economist Aditi Nayar said however that rising global commodity prices and a waning of the base effect would push up in December.