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Macro Economy
Inflation falls below 4 pc amid fears over oil shocks

NEW DELHI: Inflation fell to 3.84 per cent in July end, the lowest since August 2003, amid fears of another round of domestic oil price hike after global prices crossed $65 a barrel recently.

Though the UPA government has kept its promise of containing prices of essential items and bringing down inflation to levels seen during the previous NDA regime, RBI Governor, Mr Y V Reddy has warned that rising global crude prices will affect forex rese rves on one hand and influence domestic prices on the other.

While RBI is keeping a close watch on prices, the Petroleum Minister, Mr Mani Shankar Aiyar is pitching for another round of fuel price hike considering the losses incurred by PSU oil majors such as HPCL, BPCL and IBP.

The fire at ONGC's Bombay High oil platform coupled with spiralling global crude prices may put pressure on inflation.

Moreover, the floods in Maharashtra, Gujarat and Orissa also raise doubts about the farm output and their prices during later half of this fiscal.

Inflation came down to 3.84 per cent in the week ended July 30, from 4.07 per cent a week ago and 8.02 per cent a year ago, mainly due to the "base year effect" and lower prices of food items, chemicals and metals.

However, a key industrial fuel - furnace oil - rose during the week, which may impact prices of manufactured items in the days to come.

Wholesale Price Index (WPI) remained same at previous week's level of 194.5 points. It was at 187.3 a year ago.

The Government revised upward the inflation figure to 4.39 per cent in week ended June 4, from the provisional estimate of 4.22 per cent, while WPI was revised up to 192.8 points as against provisional level of 192.5 points. - PTI

Prev: IIP grows 11.7 pc in June
Next: CMIE raises GDP growth target to 6.8 pc

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