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Inflation declines to 7.45 pc in Oct

New Delhi(PTI): Inflation declined marginally to 7.45 per cent in October even though prices of food items like rice, wheat pulses and potato showed a rise.

Inflation, as measured by the Wholesale Price Index (WPI), was 7.81 per cent in September. In October last year, however, it stood at 9.87 per cent.

Food inflation, as a category, declined to 6.62 per cent during the month, from 7.86 per cent in the previous month. Food articles have 14.3 per cent share in the WPI basket.

While wheat turned expensive by 19.78 per cent from 18.63 per cent in September, cereals became dearer by 14.35 per cent from 14.18 per cent during the period.

On year-on-year basis, potatoes were costlier by 49.13 per cent, pulses by 20 per cent and rice by 11.40 per cent.

However, vegetables prices declined by 7.45 per cent, while onion was down by 8.99 per cent on an annual basis during the reported month.

At the same time, prices of bajra declined by 6 per cent and fish-marine by 5 per cent.
For the fuel and power category, inflation moderated to 11.71 per cent from 11.88 per cent. However, diesel prices increased by 14.60 per cent during the month.

In the manufactured items category, prices of cotton textiles, man-made textile, iron and steel paper and paper products, rubber and plastic products rose relatively at a lower pace compared to the same month of the previous year.

The rate of price rise in the manufactured products was 5.95 per cent in October, as against 6.26 per cent in the previous month.

Inflation for August was revised upwards to 8.01 per cent from 7.55 per cent as per provisional estimates.

Retail inflation in October moved closer to the double digit mark at 9.75 per cent.
This was on account of rising prices of food items such as sugar, pulses and vegetables as well as clothings. Consumer Price Index (CPI) was 9.73 per cent in September.

Concerned over the persistent inflation, the Reserve Bank had last month in its half-yearly monetary policy review kept benchmark interest rate unchanged. However, RBI reduced cash reserve ratio by 0.25 per cent to infuse additional liquidity of Rs 17,500 crore into the financial system.

Accordingly, the CRR or the portion of deposits banks have to park with the RBI now stands at 4.25 per cent, while the repo rate, at which RBI lends to the lenders, has been retained at 8 per cent.

The reverse repo, at which RBI absorbs excess liquidity through borrowings from banks, remains at 7 per cent.

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