India's inflation rate further fell to 8.84 per cent for the third consecutive week. Inflation fell by 0.06 percentage points during the week ended 15th November from last week's 8.90 per cent. The decline in the inflation rate will enable the Reserve Bank of India to signal cut in interest rates to boost economic growth.

Earlier, ICICI Bank CEO and MD K V Kamath had demanded that the RBI should ease money supply further to enable cut in interest rates by 200-300 basis points. The further decline in inflation will give enough room for RBI to meet the demands of cutting policy rates or reserve ratios.

 

The Reserve Bank has already injected Rs 2,75,000 crore into the system through cuts in reserve ratios, CRR and SLR, and repo rate. According to HDFC Bank Chief Economist Abheek Barua, the recent  decline in inflation might prompt the RBI to cut CRR by 50 basis points. However, the reduction in inflation failed to reduce the prices of many food and manufactured products.

 

Although some manufactured products such as imported edible oils, rubber, metals like iron and steel, and some primary food articles like fruits, sea-fish and tea turned cheaper, but fuel products' prices remained unchanged. Prices of fuel products category remained unchanged despite the fact that the global prices of crude oil has gone down. Many products such as vegetables, moong, rice, bajra, masur, maize and soyabean turned expensive among food and non-food products in primary articles group.