Ashok Dasgupta

‘No fear of sustained deflation.’

NEW DELHI: In a queer play of numbers, even as essential food articles continued to be dearer owing to high farm-gate prices of cereals and inadequate availability of coarse grains and pulses, the rate of inflation slid further to 0.27 per cent for the week ended March 14 from 0.44 per cent in the previous week.

Evidently, the 17 basis points decline in the wholesale price index (WPI) has resulted in hardly any relief to the common man as the new low in inflation in over 30 years at near zero is being attributed to the effect of a high base at 8.02 per cent in the same period a year ago.

“This [fall in inflation] is not because of lack of effective demand. It is basically due to the base effect and that is not something which we are unaware of, not something which we are not factoring [in],” Economic Affairs Secretary Ashok Chawla said.

During the week, prices of non-processed primary food articles rose 0.1 per cent on a weekly basis and by a massive 7.10 per cent on a yearly basis. Likewise, in the manufactured food items category, prices increased by 1.2 per cent on a weekly basis and by 6.63 per cent year-on-year.

According to Crisil’s principal economist D. K. Joshi, the increase in food prices was on account of bad farm performance in pulses and coarse cereals although production of wheat and rice has been good.

Commenting on the WPI data, RBI Governor D. Subbarao noted that while the decline to 0.27 per cent in the second week of March was a positive feature, there should not be any fear of the economy slipping into deep deflationary cycle. “CPI (Consumer Price Index) is still elevated.

“There are four indices of CPI. Some of them are still in double digits. Our own view is [that] there is no fear of sustained deflation in India,” he said.