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Giving some relief to the Government, headline inflation for January has come down to a two-year low of 6.55 per cent. With this, the Government expects to end the fiscal with an inflation rate close to 6 per cent.
According to the new monthly inflation numbers, the first after weekly data was discontinued, the wholesale price index (WPI) stood at 6.55 per cent compared with 9.47 per cent last year. This number was 7.47 per cent in December 2011.
Commenting on the new data, the Finance Minister, Mr Pranab Mukherjee, expressed confidence that moderation in inflation would continue in the coming months. However, softening in prices of manufactured goods, despite the rapid decline in non-food primary inflation, might be more gradual.
The Finance Minister also said that the main worry going forward is on edible oils, milk and some animal proteins which may continue to threaten food inflation, as the required institutional reforms in agricultural marketing and improvement in storage and cold chains will operate with a lag.
Moreover, these are areas where States have to take a lead and take advantage of Central Government initiatives announced in the last two Union Budgets, he added.
Meanwhile, the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, claimed that the Government's effort to check inflation is showing good results.
“I had said that if inflation does not come down in January, then people can legitimately criticise the Government. It has come down in January so it does show that we knew what we were doing,” he added.
Monthly inflation for food articles has turned negative. The new data say it stood at -0.52 per cent for January from a high of 16.68 per cent in January 2011. Four key items in the list of food articles, wheat (-3.48 per cent), vegetables (-43.13 per cent), potato (-23.15 per cent), and onion (-75.57 per cent) have seen prices going down.
However, the concern is that inflation in manufacturing is still higher than last year. WPI for manufacturing has been recorded at 6.49 per cent while it was 5.32 per cent last January. Here cement and lime (8.16 per cent) along with basic metal alloys and metal products (11.99 per cent) and iron and semis (18.46 per cent) have seen significant increase.
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