Inflation slips to nearly 1-yr low

After rising for two consecutive weeks, inflation again began to cool down on the back of slipping prices of crude oil, fruits, vegetables and metals.

The annual rate of inflation calculated on point-to-point basis fell at 5.07% for the week ended on January 24, 2009 from 5.64% for the week ended on January 17, 2009.

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It was 4.78 percent on the corresponding week last year, Office of Economic Adviser, Ministry of Corporate Affairs informed in its latest Wholesale Price Index report.

According to the report, this week’s inflation was the lowest after February 09, 2008 when inflation was 4.98%.

The market experts assume that if the current speed continues, inflation can even come below 3%, the comfort level, and inflation would turn into deflation – persistent decrease in the level of consumer prices – by May this year. The government has also reduced the prices of motor fuels that would put dogmatic impact on the prices of commodities that can be seen in future WPI data.

Due to continuous falling, the Reserve Bank of India can also make another round of cut before the end of this fiscal year for strengthening the economic structure and boosting the reality and finance sector that is depreciating gradually since last October due to global meltdown, experts added.

The annual rate of inflation calculated on point-to-point basis for primary article group comprises of food article and non-food article sub groups – fell to 9.02% for the week ended on January 24 as against its previous week’s data of 11.01%.

In ‘Manufactured product group’, the sub group of ‘Basic Metals Alloys & Metal Products’ became the major factor for bringing inflation down this week as the prices of metals cumulatively pull down the index of metal subgroup by 5.6%.

According to WPI, the annual rate of inflation based on final index, calculated on point-to-point basis, stood at 7.86 percent as compared to 8.00 percent (Provisional) reported earlier vide press note on December 11, 2008.