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Its lowest level in 14 months; WPI declines marginally

Our Bureau

New Delhi, June 29

The annual wholesale price index-based inflation rate rose 4.03 per cent during the week ended June 16, lower than the previous week’s annual rise of 4.28 per cent. The dip in the inflation rate during the latest week, its lowest levels in 14 months, came about after a fall across all the three major indices — primary articles, manufactured products and fuels, according to data released by the Ministry of Commerce and Industry here on Friday.

During the latest reported week, the WPI declined by 0.05 per cent to 211.7 points during the week from 211.8 points a week ago. Inflation was recorded at 5.50 per cent during the corresponding week of the previous year.

The current inflation level is much below the target projected by the RBI for the fiscal. The RBI has a target to contain inflation at close to five per cent during 2007-08 and bring it down to 4.0-4.5 per cent over the medium-term. Inflation had hit a two-year high of 6.69 per cent in January this year.

Among the major categories, inflation in food items category in the Primary Articles’ group declined to a 41-week low of 6.75 per cent from 7.58 per cent in the week ended June 9. The fall was seen across all primary articles, barring condiments and spices, oilseeds and minerals.

Inflation in manufactured products also declined by 12 basis points to 5.13 per cent because of a fall recorded in case of manufactured food products, textiles, rubber and plastic products and non-metallic minerals.

Inflation in the fuel group dropped further to a negative 1.35 per cent, from a negative 1.23 per cent in the week ended June 9. The current inflation in the fuel group is lowest in more than the last eight years, according to the Centre for Monitoring Indian Economy.

The negative inflation in the fuel group is a result of the high base last year. The Government had hiked the retail prices of petrol and diesel in June 2006, which were subsequently reduced in February 2007 and March 2007. Hence, the current prices of these products are ruling below their year-ago levels, thus pulling inflation in the fuel group in the negative zone, the CMIE said.

Earlier during the week, the Finance Minister, Mr P. Chidambaram, had said in London that the central bank tightening the monetary policy and rupee appreciation had helped moderate inflation and more rate rises may not be needed if the trend continues.

Inflation for the week ended April 21 has been revised to 6.07 per cent, against 5.77 per cent estimated provisionally, as the final WPI number was revised to 211.5 points against 210 points estimated earlier.

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