RTTNews - India's inflation rate continued to be negative with the rate for the week ended July 4 standing at 1.21%, compared to the previous week's negative figure of 1.55%, enabling Reserve Bank of India or RBI to keep interest rates low to spur economic growth. The annual rate of inflation was 12.19% for the corresponding week of the preceding year, say data released Thursday by the Ministry of Commerce and Industry.
The country's annual rate of inflation turned negative for the week ended June 6 for the first time since the new wholesale price index or WPI series started in 1995. Negative inflation implies that the average wholesale price level is lower during a given week, than it was in the corresponding week a year ago.
Going by the provisional figures, the wholesale price index or WPI for all-commodities rose by 0.7% to 236.4 from 234.7 for the preceding week.
Inflation, based on the wholesale price index, dropped--due to lower prices of fish-marine, soyabean, ragi, fruits and vegetables, as also some manufactured products covered under all category groups, despite an increase in fuel costs following the Indian government's decision to raise fuel prices effective July 1.
The final estimate of inflation for the week ended May 9 was enhanced to 1.56% from the earlier provisional figure of 0.61%.
The drop in prices of fish-marine, soyabean, ragi, fruits and vegetables, as also raw rubber, kept the rate of the main index for primary articles unchanged from the previous week's level. However, those of gingelly seed, coffee, cotton seed, arhar and maize, as also condiments and spices moved up.
The index representing fuel, power, light and lubricants rose by 3.1% due to the higher prices of naphtha, furnace oil, petrol, high-speed diesel oil, light diesel oil and bitumen.
The index of Manufactured Products rose by 0.2%, due to higher prices of benzene, sandals, coffee powder, bidi, resins, oil cakes, car chassis (assembled), lead ingots, foundry pig iron, and basic pig iron, while those of imported edible oil, all types of bran, purified terephthalic acid, coconut oil, sooji, MS bars and rounds, gur and maida, as also rice bran oil dropped.
Finance Minister Pranab Mukherjee has placed the revival of growth at the top of his agenda to create jobs and cut poverty. The RBI expects inflation to remain low this year, due to global recession and because prices rose faster in the same period last year.
The Indian Parliament on Wednesday approved the government's plans to raise more than Rs.4 lakh crore this fiscal to cover the highest fiscal deficit. In view of this, keeping interest rates low will be challenging for D. Subba Rao, Governor of RBI.
The government is borrowing more, as Mukherjee steps up spending on infrastructure and the rural poor in this year's budget to spur growth.
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