Encouraged by moderation in inflation during January, the Planning Commission today forecast continuation of the trend in the coming month due to decline in the cost of onions and other vegetables.

“I am absolutely clear that in February the inflation will come down further,” the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, told reporters here.

The headline inflation or Wholesale Price Index (WPI) declined marginally to 8.23 per cent in January from 8.43 per cent in the previous month as per the data released today.

Explaining the reason for the spike in headline inflation, Mr Ahluwalia said: “In January, for three weeks basically the prices of onions and vegetables were high.”

He said: “The prices of primary articles were high because of the impact of onions and vegetables. These things have very small weight but the shooting up of price of these products was quite excessive.”

According to Mr Ahluwalia, the headline inflation would come down primarily because of easing of vegetable prices. He pointed out that the prices of onions in February have crashed.

On low industrial growth in the past few months, he said: “I do agree that for two months it has been low. We need to watch if there is recovery or not. Certainly if it doesn’t happen, we need to look at what is that is holding up the manufacturing (sector) production.”

In his view, in the medium term during the 12th Plan period (2012-17), the country should be aiming for better than double-digit growth of manufacturing sector.

About the volatility in industrial growth numbers, he said: “IIP (Index of Industrial Production) numbers tend to vary from month to month.”

Allaying fears that this trend could hurt the country’s growth story, he said: “Whatever we have seen is consistent with the growth (8.5 per cent) that we set for the current year 2010-11.”

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