The Hindu Business Line : Inflation rate drops as most items turn cheaper

Inflation has consistently been on the decline for eight weeks now and stands only slightly higher than the rate of 6.2 per cent in the week ended March 1, 2008.

Our Bureau

New Delhi, Jan. 1 Inflation fell to a near 10-month low during the third week of December, helped by across-the-board dip in prices, prompting predictions of a further easing of the monetary policy after a series of rate cuts in the last quarter of 2008.

The annual Wholesale Price Index-based inflation rose 6.38 per cent during the week ended December 20, lower than the previous week’s annual rise of 6.61 per cent.

The official WPI for ‘All Commodities’ for the week ended December 20 declined by 0.2 per cent to 230.2 points, from 230.7 points the previous week.

Inflation was recorded at 3.74 per cent during the corresponding week of the previous year.

Inflation has consistently been on the decline for eight weeks now and stands only slightly higher than the rate of 6.2 per cent in the week ended March 1, 2008.

Commodity group-wise examination of year-on-year inflation shows that inflation in all the commodity groups has recorded decline.

Primary group

In the ‘primary articles’ group, the rate of inflation decreased to 12.1 per cent, compared with 12.2 per cent reported last week.

In the ‘fuel and power’ group, the rate of inflation declined to (-) 0.7 per cent compared with (-) 0.2 per cent reported in the previous week, while in the “manufactured products” group, the inflation rate decreased to 6.8 per cent, compared with 7.0 per cent in previous week.

Some of the items that still record increases in the week-on-week inflation rate are most cereals and pulses except moong and arhar, gur, rape and mustard oil, fruits like apples, pineapples, bananas, raw rubber and newspaper.

Onion dips

Items that have registered decline in the inflation rate are onions, potatoes and tea among food articles, steel and related products, lead and zinc ingots and iron ore. Contribution of primary articles to the year-on-year inflation rate for the week ending December 20, 2008 show that this group accounted for 42.8 per cent, as against their share of 22 per cent to the WPI basket, while the fuel and power group has continued to register negative contribution.

The year-on-year inflation in essential commodities has been stable at 8.8 per cent in the week ended December 20, 2008, while for the combined food index (weight of 25.43 per cent), the year-on-year inflation was higher at 8.8 per cent compared with 8.7 per cent last week.

For the week ended October 25, the final WPI and the annual rate of inflation based on final index, calculated on point to point basis remained unaltered at their provisional level of 238.5 points and 10.72 per cent respectively.

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