17.1.09

Inflation dips to 5.24%


Inflation eased to 5.24%, its lowest level since February last year, for the week ended January 3 on the back of a sharp fall in the prices of food articles. The decline in the wholesale price index raised expectations of further cuts in short-term rates by the Reserve Bank of India. If the government cuts the retail prices of petrol and diesel further, as expected, the annual rate of inflation could drop at an even faster rate. The price index for fuel products is already below last year’s levels.Independent economists expect inflation rate to fall at a faster pace. Some economists even foresee a deflation. Inflation has fallen by 767 basis points from the peak of 12.9% recorded for the week ended August 2, 2008. Though the inflation rate for food articles declined to 9.5%, it is still high which is a major cause of concern for the government. The corresponding week last year saw a food price inflation of 1.86%.Inflation for the week ended November 8 was revised downwards to 8.71% from provisional numbers of 8.9% released earlier.

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