The Hindu Business Line : Inflation cools off a bit on cheaper vegetables, edible oils

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Inflation cools off a bit on cheaper vegetables, edible oils

Some respite for Govt

Wholesale prices in the iron and steel category were up 34 per cent on a year-on-year basis

Our Bureau

New Delhi, April 17 A sharp drop in vegetable and edible oil prices, along with a high base last year, gave the Government a breather in its fight against the spiralling inflationary trend witnessed over the past several weeks.

The annual wholesale price index-based inflation rose 7.14 per cent during the week ended April 5, down from the previous week’s 7.41 per cent, the Ministry of Commerce and Industry said here on Thursday. After being pushed to the wall by allies and Opposition parties over rising prices, the slowdown in inflation could offer some respite for the Centre, even though at 7.14 per cent inflation continues to be at a three-year high.

Besides, the moderating effect of a sharp rise in the base year WPI reading during the latest reported week would not be available in the coming weeks, where the base year index (the reading for the corresponding weeks of 2007) exhibits a flattening trend, buttressing expectations that the Government may have to step in with new measures to keep prices under further check.

During the latest reported week of April 5, apart from vegetables, which recorded a sharp drop in year-on-year price rise to four per cent from 16 per cent a week ago, and edible oils, where inflation was down from 20 per cent to 17 per cent, prices held firm for most of the other major commodity categories.

Wholesale prices in the iron and steel category were up 34 per cent on a year-on-year basis, while among essential items, cereal prices jumped 7 per cent, while prices of milk was marginally up at 9 per cent against 8 per cent rise in price levels during the previous week. Dairy product prices rose 9 per cent, while cement prices were up 5 per cent. In the fuels category, both mineral oil and coal prices were up 9 per cent during the latest week.

Incidentally, the Government has effected a sharp upward revision in the final inflation rate for the week ended February 9 (latest reported week where final numbers are available) to 4.98 per cent, from the provisional estimate 4.35 per cent — a wide gap of 63 basis points.

During the previous week where final figures were made available (week ended February 2), there was a 67-basis point difference between the final and the provisional data, leading to speculation that the actual inflation during the latest week could well be higher than what is being reported provisionally.