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Inflation at record low of (-)2.06% in February

Persistent deflationary pressures  pulled down the rate of price rise to a record (-)2.06 per   cent in February – keeping inflation in the negative zone for  the fourth straight month – on account of cheaper food, fuel  and manufacturing products, raising industry clamour for  further cuts in interest rate, reports PTI.
Inflation measured on wholesale price index (WPI) was  at (-)0.39 per cent in January, (-)0.50 per cent in December  and (-)0.17 per cent in November.
It was 5.03 per cent in February 2014.       With inflation dropping to record lows, industry demanded  further easing of interest rates to boost industrial growth.

Experts cautioned however that unseasonal rains this  month could be a dampener and the decline in food inflation  may be short-lived, prompting the Reserve Bank to avoid
lowering rates immediately.      “There is a low likelihood of a rate cut in the April  monetary policy  review, notwithstanding the lower-than-  expected WPI print for February. We expect further repo rate  cuts to be limited to 50 basis points in the remainder of  2015,” ICRA Senior Economist Aditi Nayar said.
As per official data released today, inflation in food  articles category stood at 7.74 per cent, and the in  manufactured products category, it was 0.33 per cent.   Fuel and power  inflation saw significant cooling at  (-)14.72 per cent in February.     In the food basket, while inflation in onions, pulses and  protein-rich items like egg, meat and fish inched upwards,  vegetables, fruits and milk saw the rate of price rise decline  during the month. Inflation in vegetables stood at 15.54 per cent in  February, lower than 19.74 per cent in the previous month.
Rate of price rise in potato was (-)3.56 per cent as  against 2.11 per cent in January.

“The decline in food inflation will be short lived as  unseasonal rains have already started to have an effect on  production. We expect the government to act pro-actively as
food inflation is likely move up from the next month onwards,”  Deloitte (India) Senior Director Anis Chakravarty said.  Negative inflation is largely driven by price trends in  the fuel and manufactured goods segment. Besides, subdued  global commodity prices have aided softening of inflation.  Industry chambers pitched for further measures to  strengthen the demand and urged RBI to continue with its rate  cutting cycle in the coming months.
“Government and RBI should also engage with the banks to ensure that the lowering of policy rates already effected is  passed on to the investors and consumers in the form of lower
lending rates,” Ficci said.  As per the data, inflation in non-food articles was  (-)5.55 per cent, while in egg, meat and fish it was 1.27 per  cent. However, the rate of price rise was high in onion at  26.58 per cent in February, against (-)1.90 per cent in  January.
Commenting on WPI, Assocham said: “The situation demands  urgent action to boost industrial and consumer demand.  Lowering of interest rates and easy credit availability should
be the top priorities of the Government and the RBI”.    The WPI inflation numbers would be taken into account by  the Reserve Bank for formulating its next monetary policy
announcement, scheduled on April 7.    The RBI has lowered policy rates by 0.50 per cent between  January and March to prop up growth as it saw inflationary
pressures easing.

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