17.8.10

Inflation dips a bit

The inflation rate for July has fallen to single digit, 9.97%, for the first time in five months. The figure has given the government a muchneeded relief as a coordinated Opposition onslaught on price rise had completely paralysed both the Houses of Parliament during the first week of the ongoing Monsoon session.
Finance minister Pranab Mukherjee said prices would fluctuate during the monsoon but would stabilise at the end of the season. “For vegetables, fruits, milk and some seasonal food items, the government
has no control. But they are moderating,’’ he said. The FM said the lower inflation was also a result of RBI policy rate review. “Policy rates had some impact but there are also base factors,’’ Mukherjee said, adding that the drop in prices would continue.The wholesale price index (WPI) inflation had entered double digits in February and declined 0.58% in July from 10.55% in June, as the prices of potatoes, onions and cement moderated.
Planning Commission deputy chairman Montek Singh Ahluwalia pegged it at 6% by December, similar to the projection made by the PM’s economic advisory council, the finance ministry and the RBI. He, however, said the July inflation was “still too high’’.
In July, inflation showed downward trend mainly on account of year-on-year decline in prices of essential items like potato (-44%), vegetables (- 15%), cement (-8%), onion (- 7%) and edible oil (-0.34%).
Inflation was at 10.55% in June, while for May it was revised upwards to 11.14% from the provisional number of 10.16%. Inflation entered the double digit territory in February when it climbed to 10.06%.

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