The Hindu Business Line : Inflation rate lower on cheaper food products

Welcome respite
Prices of metals, nickel, alloy steel up
Methanol clocks 24% decline in rates
No change in prices of fuels and lubricants

New Delhi May 25 The annual wholesale price index (WPI)-based inflation rose 5.27 per cent in the week ended May 12, lower than the preceding week's annual rise of 5.44 per cent.

The drop in the rate to an eight-month low during the latest reported week was mainly on account of a fall in prices of some manufactured food products, Government data showed on Friday.

Vegetables dearer

The annual inflation rate was 4.63 per cent during the corresponding week of the previous year.

The Wholesale Price Index (WPI) rose by 0.1 per cent to 211.7 points during the week ended May 12 from 211.4 points for the previous week

Within the Primary Articles group, food products such as processed tea, flour, maida, sooji and bran turned cheaper, even as eggs and vegetables turned expensive.

In Manufactured Products, metal prices including prices of stainless steel moved up by 34 per cent, nickel alloys by 17 per cent and alloy steel casting by 13 per cent.

Adhesive prices rose by 25 per cent, resin by 18 per cent, vitamin liquids by eight per cent and phenol by seven per cent. Prices of methanol, however, declined by 24 per cent.

Edible oils cheaper

Among manufactured food items, prices of processed tea, wheat flour, maida, sooji, bran and imported edible oil declined by nine per cent, five per cent, three per cent, two per cent and one per cent respectively.

However, prices of canned fish moved up by four per cent.

The prices of various fuels, power and lubricants remained unchanged.

While the drop in the inflation rate should allay apprehensions about the possibility of the Reserve Bank of India hiking the mandatory requirement for banks to keep cash with it.

The RBI has already hiked the cash-reserve ratio (CRR) thrice since December 2006.

Last week, Prime Minister Dr Manmohan Singh expressed optimism that inflation would cool down to five per cent as prices moderated last week as well.

The Finance Minister, Mr P. Chidambaram, had also said that prices would moderate further and had called upon industry not to raise prices arbitrarily.

"We appeal to the industry not to exercise pricing power arbitrarily," he said at a CII conference on Thursday.

Inflation for the week ended March 17 was revised to 6.56 per cent compared to the provisional figure of 6.46 per cent. This was done as WPI for the week stood at 209.6 points against the provisional figure of 209.4 points.