Inflation dips to 8.58% in October

NEW DELHI: Inflation declined for the second consecutive month to 8.58% in October, with price pressure mostly confined to food items.

Inflation stood at 8.62% in September. The fall in inflation in October is significant, since the base was quite low a year ago at 1.48%.

While food inflation was at the elevated level of 14.13%, despite moderation from 15.71% in the previous month, inflation on manufactured items stood at a comfortable 4.75%. However, this was still higher than the 4.59% inflation on manufactured items witnessed in September.

Manufactured items have the highest weight of 64.9% in the wholesale price index, on the basis of which inflation is calculated.

Most food product prices either declined or showed moderate increases in October, but onion rates shot up by 24.07% during the month, as crops in parts of Maharashtra were damaged due to torrential rains.

In the wake of 16-month-low industrial growth at 4.4% in September, declining inflation may prompt the RBI to relax its monetary tightening drive.

Enthused by the figures, Prime Minister's Economic Advisory Council chairman C Rangarajan said, "We hope it will come down to 6.5% by December-end and something close to 5.5% by March, 2011."