The wholesale price index (WPI)-based inflation dipped to a 19-month low of 8.39 per cent in October on easing prices of food, fuel and manufactured items.
Declining for the fifth consecutive month, the WPI inflation cooled to single digit after a gap of one-and-a-half years, giving some comfort to the RBI which has been struggling to rein in price rise.
RBI Governor Shaktikanta Das had last week said consumer price index-based inflation was likely to ease to below 7 per cent in October. RBI takes into account CPI (retail) inflation for deciding monetary policy stance and benchmark interest rates.
Releasing the October WPI inflation data on Monday, the commerce and industry ministry said: "The decline in October inflation is primarily contributed by fall in the price of mineral oils, basic metals, fabricated metal products, except machinery and equipment; textiles; other non-metallic mineral products; minerals etc."
Since April 2021, WPI inflation remained in double digits for 18 months with September print at 10.79 per cent. Inflation in October 2021 was 13.83 per cent.
The earlier single-digit WPI inflation was recorded in March 2021, at 7.89 per cent.
With regard to inflation in food articles, the data showed that it moderated to 8.33 per cent in October, from 11.03 per cent in the previous month.
While prices of vegetables, potato, onion, fruits, egg, meat and fish showed a decline, uptick was witnessed in paddy, wheat and pulses.
Bank of Baroda (BoB) in a note said, globally also wheat prices have registered an upswing due to uncertainties related to Ukraine exports.
"Core WPI softened further to 4.7 per cent in October from 7 per cent in September led by dip in manufactured inflation. Going further, on the back of moderation in global prices, WPI is expected to ease further," BoB said.
The inflation in oil seeds has remained subdued at (-)5.36 per cent, while minerals were high at 3.86 per cent.
Inflation in fuel and power eased to 23.17 per cent, while in manufactured products it was 4.42 per cent.
In food articles , inflation in October was 8.33 per cent, against 11.03 per cent in the previous month.
Inflation in vegetables was at 17.61 per cent during the month, against 39.66 per cent in September.
The RBI has hiked interest rates by 190 basis points between May to September to 5.90 per cent to tame persistently high inflation which has remained above the RBI's upper tolerance level of 6 per cent for three consecutive quarters.
Barclays India in a note said relatively lower commodity prices and favourable base effects could slow WPI materially over the coming months.
"While inflation on both retail and wholesale indices has been on a moderating trajectory, evolving risks would warrant policymakers to take a cautious view," it said.
Barclays expects the RBI's monetary policy committee to deliver a 35 basis points rate hike at the December meeting to bring the repo rate to 6.25 per cent.