The Hindu : Business : Inflation rate slips further

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Friday, Jul 10, 2009
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Inflation rate slips further

Special Correspondent

With monsoon playing truant, there can be added pressure on foodgrain prices, feel analysts

NEW DELHI: The rate of inflation slipped further to minus 1.55 per cent for the week ended June 27 from (-) 1.30 per cent in the previous week owing to certain manufactured goods turning cheaper even as soaring prices of essential food commodities continued to hurt consumers.

With this, the wholesale price index-based (WPI) inflation has remained well below zero for the fourth straight week in a row which, apart from the fall in prices of manufactured goods, has been on account of a high base effect. The WPI-based inflation during the like week a year-ago was at a high of 12.03 per cent.

However, a further fall in the inflation rate is likely to be halted as the WPI numbers may move upwards in the coming weeks to reflect the impact of increase in the administered prices of petrol and diesel by Rs. 4 and Rs. 2 a litre, respectively earlier this month.

Commenting on the expected movement of the WPI-based inflation during the current fiscal at the customary post-budget briefing here on July 6, Chief Economic Advisor Arvind Virmani had said: “… the wholesale price index (WPI) inflation will go down for a while and [then] it will come up. At the end of March this year [2009-10], this could be in the range of 2 to 4 per cent”.

Analysts, however, fear that with the monsoon playing truant in the sowing season in some parts of the country, there could be an added pressure on foodgrain prices.

Vegetables dearer

During the week under reference, fish marine was costlier by 10 per cent, arhar, fruit and vegetables by two per cent each while urad and moong rose by one percentage point each. Also dearer were butter and imported edible oil by one percentage point each.

Accounting for the lower inflation were the prices of eggs which fell by 10 per cent, tea by 3 per cent and maize and masur by one percentage point each.

Among manufactured goods, cast iron prices declined by 12 per cent, alloy steel by 5 per cent and steel ingots by one percentage point.

Meanwhile, inflation rate for the week ended May 2 stood revised upwards at 1.48 per cent against the provisional estimate of 0.48 per cent.

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