RTTNews - India's inflation rate for the week ended May 2 was less than one percent for the ninth successive week and dropped after four-week rise in April to 0.48% from 0.70% the week before. This was despite increase in prices of food products like pulses, cereals as also fruits and vegetables. It stood at 8.73% for the corresponding week of the preceding year, say data released Thursday by the Ministry of Commerce and Industry.
Going by provisional figures, the wholesale price index or WPI for all- commodities rose by 0.4% to 231.6 from 230.7 for the preceding week.
Inflation, based on the wholesale price index, increased mainly due to the lower prices of raw silk, tobacco, bitumen, aviation fuel, as also some manufactured products covered under all-category groups.
The final estimate of inflation for the week ended March 7 was increased to 0.89% from the earlier provisional figure of 0.44%.
The main index for primary articles rose by 0.4%, due to the higher prices of raw wool, ragi, raw rubber, sunflower, tea, raw cotton, bajra, maize, fruits and vegetables, urad as also copra. However, the prices of raw silk and tobacco declined.
The index representing fuel, power, light and lubricants rose by 0.2% due to higher prices of furnace oil, naphtha and diesel oil, while those of bitumen and aviation turbine fuel dropped.
The index of Manufactured Products rose by 0.4%, due to the higher prices of pesticides, benzene, calcium ammonium nitrate n-content, purified terephthalic acid, imported edible oil, sugar, other iron steel, foundry pig iron, as also basic pig iron, whereas those of PVC resin, lead ingots, zinc, methanol, besides car chassis (assembled) declined.
Reserve Bank of India Governor Duvvuri Subba Rao said inflation was always a concern, and though headline inflation had eased, consumer price inflation (CPI) was still high.
He added there could be negative inflation over the next few months, but it would not lead to deflation, because India was not suffering from a demand contraction.
Subba Rao expects the inflation for the fiscal 2010 would be 4%. He, however, added that the consumer price index inflation would not be as low as WPI.
D.H. Pai Panadiker, president, RPG Foundation, an economic policy group in New Delhi, said, The inflation rate is low currently and the government would think it has room to push another round of fiscal stimulus through. The central bank is probably nearing the end of its rate-cutting cycle.
Attributing the current movement of inflation to mostly seasonal factors, Indranil Sen Gupta, of DSP Merrill Lynch, said the inflation would creep up again towards the year-end, as commodity prices bottom out and the base effect picture would come into play.
Said HDFC Bank Chief Economist Abheek Barua: inflation will dip below zero in June, and the base effect will start intensifying by June and inflation would remain negative up to November. And, negative inflation for six months will just be a statistical phenomenon and not a cause of concern.
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