India’s wholesale inflation rate fell to 3.74 per cent for August, down from 5.19 per cent in July and 6.99 per cent in August 2013, signalling easing inflationary pressure at the broader level in the economy.
This may not in itself induce a looser monetary policy as the RBI is now more closing targeting moderation of consumer inflation for deciding key policy rates. However, the sharply lower wholesale inflation could set the stage for lower prices for consumer goods and services in the coming months, which in turn could lead to lower interest rates, crucial for kick starting investments in the country.
Consumer inflation had moderated, but only marginally to 7.8 per cent last month against 7.96 per cent in July. This was due to high food prices, which has remained stubborn. Fruits, vegetable and milk & milk products particularly rose fast, which pushed up food inflation and thereby consumer inflation.
Meanwhile, the wholesale inflation for June has been revised upwards to 5.66 per cent compared with 5.43 per cent declared as per official provisional numbers.
(Edited by Joby Puthuparampil Johnson)