Wholesale prices rose by 3.07 per cent during the week ended October 13, but the five-year-low inflation is unlikely to prompt the central bank to reduce interest rates in its monetary policy review next week.
Inflation based on the wholesale price index stood unchanged during the period under review compared to the previous week despite rise in prices of food article and some manufactured products, according to government data.
During the week, food items like fruits and vegetables, pulses, eggs meat and fish became expensive. At the same time, some manufactured food articles like flour, maida turned cheaper. The wholesale price-based index stood at 5.46 per cent in the corresponding week a year ago.
The price index has remained below the Reserve Bank's forecast of 5 per cent for this fiscal during the past few weeks, but analysts said the central bank will not cut benchmark interest rates at the policy review on October 30.
"Although there are expectations of rate cut, in the given scenario there is very little possibility of lowering the benchmark rates," HDFC Bank Chief Economist Abheek Barua told PTI. RBI may not even increase Cash Reserve Ratio -- the percentage of deposits that banks must keep with RBI -- in the wake of capital outflow in the past few days, he added.
Finance Minister P Chidambaram had said in Washington last week that "inflationary pressures from the supply side both on account of oil and food prices remain strong".
Crude oil prices during early trade today topped a record $91 per barrel. India imports nearly three-fourths of its crude oil requirement.
Headline inflation around 3.1 per cent is consistent with the medium-term objective of 4-4.5 per cent, Chidambaram had said.