Date:05/09/2008 URL: http://www.thehindu.com/2008/09/05/stories/2008090560471500.htm

National

Inflation eases to 12.34%

Special Correspondent

NEW DELHI: The rate of inflation eased to 12.34 per cent for the week ended August 23 from 12.40 per cent in the previous week, mainly as a fall-out of the decline in prices of food articles such as fruits and vegetables.

The much awaited slide in inflation, as measured by the Wholesale Price Index (WPI) for the second successive week, may bring some respite to the government which has been battling on various fronts to hold the price line. “There is [a] movement downward,” said Commerce and Industry Minister Kamal Nath and the downtrend could not have been timelier as Prime Minister Manmohan Singh on Thursday reviewed the price situation and availability of food items at a meeting of the Cabinet Committee on Prices .

However, despite the check on the price spiral for a fortnight now, the Reserve Bank of India made it clear that its tight-money policy would continue to bring down the inflation rate to seven per cent by the end of the current fiscal year.

Analysing the WPI data, the Finance Ministry asserted that the rate of inflation for the 30 essential commodities had declined to 6.9 per cent from 7.24 per cent during the period. In the ‘primary articles’ group, it noted that 18 out of a total of 98 articles had shown a decline in prices. These included, among others, rice, jowar, moong, masur, arhar and urad, tomatoes, groundnut, mustard, caster and linseed, marine fish and raw rubber. Another 54 articles recorded no increase at all.

In the case of ‘manufactured products’, however, the rate of inflation increased to 11.28 per cent as compared to 11.02 per cent earlier. Out of 318 commodities, 294 showed no increase in prices over the previous week.

“Only 17 products, particularly sugar, hessian bags, mustard and groundnut oil, zinc and lead ingots, de-oiled and mustard cake, caustic soda, nylon filament yarn, cast iron spun pipes, newsprint and white printing paper and acids witnessed an increase in prices,” the Ministry’s statement said.