The wholesale price index rose marginally to 0.11 per cent for December 2014 over the same month the previous year. This marks a marginal up-tick from zero rise in prices in the wholesale market in November and a sharp decline from 6.4 per cent inflation in December 2013 over the corresponding month a year before.
Although, the movement in wholesale prices has lost its significance as RBI is now tracking consumer inflation more closely, the near zero inflation at the producers level would further raise voices for RBI to cut policy rates. All eyes are now on RBI on its policy stance in its monetary policy review scheduled for February 3.
Consumer inflation in the country also rose marginally to 5 per cent in December after sinking to 4.38 per cent in the previous month, the lowest level since January 2012, since when the government started compiling new consolidated national statistics for consumer inflation in India.
RBI has been looking for a sustained decline in consumer inflation with a target of bringing inflation down to 8 per cent by January 2015 and 6 per cent by January 2016.
October happened to be the first month when consumer inflation went under the RBI’s long-term target.
In its fifth bi-monthly monetary policy review last month RBI had decided to hold policy rates, as widely anticipated, at 8 per cent.
Crude oil prices have crashed to six-year lows since then which has helped contain inflation in the country.