The Hindu Business Line : Inflation rate rises on costlier food items

New Delhi, Aug. 10 The annual wholesale price index-based inflation rose 4.45 per cent for the week ended July 28, higher than the previous week’s annual rise of 4.36 per cent. The rise in headline inflation was on account of an increase in prices of primary food articles and manufactured products, according to data released by the Ministry of Commerce and Industry.

Compared to the year-ago level, headline inflation was lower by 27 basis points during the latest reported week. Inflation was measured at 4.72 per cent in the week ended July 29, 2006. The RBI has a target to contain inflation at close to five per cent during 2007-08 and bring it down to 4-4.5 per cent over the medium-term.

The Wholesale Price Index of all commodities increased to 223.4 against 222.8 the previous week.

On a disaggregated basis, inflation in the primary articles’ group was up 9.83 per cent on a year-on-year basis during the latest reported week, up from a rise of 9.75 per cent during the pervious week on account of surging prices of food items. The primary food articles’ group rose to an 11-week high of 9.10 per cent during the latest week, from 8.40 per cent during the week ended July 21.

Inflation in manufactured products was up six basis points to 4.86 per cent during the latest reported week, from a rise of 4.80 per cent during the pervious week. From a high 6.92 per cent recorded during the week ended March 24, inflation in manufactured products fell to 4.51 per cent on July 7, following which it has seen a rising trend.

Fuel group steady

Inflation in the fuel group remained steady for the second consecutive week after falling to a negative 1.74 per cent during the week ended July 21 — the lowest inflation witnessed in the fuel group since January 30, 1999.

According to CMIE, while inflation in manufactured products is expected to come down from September 2007 onwards because of the higher base last year, inflation in the fuel group is expected to continue in the negative zone at least for the next one month as the impact of the rise in the prices of the Indian basket of crude oil is more than compensated by the appreciation of rupee against US dollar.

However, the lower base form September 2007 onwards may push inflation in the fuel group up, it said.

Inflation was revised to 5.09 per cent for the week ended June 2 against the provisional estimate of 4.80 per cent as the WPI stood revised to 212.5 points compared to the provisional estimate of 211.9 points.

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