Food Price still High – WPI Down

For the week ending 22 Nov ’08, headline (wholesale price index, WPI) inflation fell to 8.40% from 8.84% last week.

Contrary to softening of WPI, CPI continued the ascent for the third successive month in Oct’08 and crossed 10% mark first time in almost ten years. Primary food articles grew 10.48% y-o-y. Food grains, cereals, pulses, vegetable, egg, meat and fish are the main drivers of this rise.

Fuel index continues to fall on the back of non-administered fuel components. Manufactured products mostly edible oil, rubber and plastic products and basic metals have witnessed a continuous fall in the recent weeks.

Inflation falling will provide more comfort to RBI to ease the monetary policy and we expect further repo, reverse-repo and CRR cuts.