The Hindu Business Line : Inflation rate drops on cheaper food items

New Delhi, Feb. 5 The annual Wholesale Price Index-based inflation rose 5.07 per cent in the week ended January 24, lower than the previous week’s yearly rise of 5.64 per cent. Inflation was recorded at 4.78 per cent during the corresponding week of the previous year.

The official WPI for ‘All Commodities’ during the latest reported week declined by 0.2 per cent to 230.1 points, from 230.5 points for the previous week. Commodity group-wise examination shows that the decrease in overall inflation in the latest reported week reflects a general decline in all the three commodity groups versus inflation rates in the week ended January 17.

Primary articles

In ‘Primary Articles’, the rate of inflation decreased to 9 per cent against 11 per cent in the previous week. In ‘food articles’, inflation recorded at 11.1 per cent against 11.2 per cent last week, continue to remain in double digits. In ‘non-food articles’, inflation fell to 5.7 per cent compared with 6.4 per cent in the previous week. Inflation in ‘minerals’ fell abruptly to (-) 0.6 per cent versus 39 per cent last week due to a steeply negative rate in iron ore.

Fuel, power

In ‘fuel and power’, the rate of inflation was (-) 0.8 per cent, versus (-) 1.4 per cent last week. In the ‘manufactured products’, inflation rate decreased from 6.2 per cent last week to 5.7 per cent in the current week. However, textiles as a sub-group still registered double digit inflation from cotton textiles, cotton yarn and jute, hemp and mesta textiles. Inflation in food products showed an increase, compared with rates in the previous weeks, with select sub-categories such as sugar, khandsari and gur, salt and oil cakes recording rates above 10 per cent. The inflation rate in case of products such as malt liquor and bidi and tobacco products in the beverages and tobacco sub-group continued to stay high.

Manufactured products

Among manufactured products, turpentine, synthetic resins in the sub-group of chemical and chemical products, tubes in the sub-group of rubber and plastic products, foundries in the base metals, alloys and metal products and the sub-group of cement, slate and graphite products persisted with inflation in double digits.

For the combined food index, the year-on-year inflation in the week ended January 24, 2009 was higher at 9.2 per cent compared with 9 per cent last week. Inflation in pulses, fruits and vegetables, condiments and spices are still in double digits.

In terms of the contribution of commodity groups to the year-on-year headline inflation for the latest reported week, the primary articles’ group declined to 40.9 per cent, from 44.2 per cent in the previous week.

The Fuel and power group’s contribution was (-) 3.6 per cent vis-À-vis (-) 5.6 per cent and the manufactured products’ contribution was 62.6 per cent versus 61.2 per cent.

For the week ended November 29, the final WPI for ‘All Commodities’ stood at 233.3 points, compared with 233.6 points reported provisionally, while the annual rate of inflation based on final index, calculated on point to point basis, stood at 7.86 per cent as compared to the provisional estimate of 8 per cent.

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