Inflation falls to 12.1%

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Inflation fell for the third week in succession to close at 12.1 per cent as on August 30 from 12.34 per cent recorded a week earlier.

While food articles rose 0.2 per cent, primary articles were up by 0.3 per cent and non-food articles also by 0.3 per cent. Manufactured products recorded a similar rise by 0.3 per cent, while food products rose 1.3 per cent. Fuel, power and light, however, remained unchanged.

As per a poll on Wednesday, India’s annual inflation rate was expected to have eased for the third consecutive week, with respite provided by softening of global crude prices. The wholesale price index was forecast to have risen 11.96 per cent in the 12 months to August 30, lower than the previous week’s rise of 12.34 per cent, according to the median estimate of 13 economists.

Shubhada Rao, chief economist at Yes Bank, for instance, who forecast 11.96 per cent, said a relatively higher reading a year earlier would also limit the number.

“Recent weeks have seen inflation stabilise. We expect it to peak in the third quarter and given the current trend it may peak around 13 per cent,” she said.

Talking about the softening inflation, commerce minister Kamal Nath last week had said the government’s supply-side measures had begun to take effect and inflation should soften from the current levels.

The finance ministry also believes inflation will come down to single digit by the end of this fiscal if oil prices keep softening in the international markets.

“If oil prices go below $100 per barrel, the wholesale price index inflation will even come down to 5-6 per cent by the end of the current fiscal,” Arvind Virmani, chief economic adviser in the finance ministry, told a news agency recently.

“I am reasonably confident that within a year, inflation will be back to normal. In the short-term, it depends on oil prices to a large extent and we have seen oil prices coming down,” he said.

He also said food price inflation has not been that severe in India when compared with the global situation, as prices of primary food articles such as fruits, vegetables, tea and lentils had gone up by 6.04 per cent during the 52-week period ended Aug 23.

“It is partly because of the nature of our economy, which is still isolated from the global situation except in one or two commodities like edible oils as we import some 60 per cent-plus of our overall edible oil requirements,” he said.


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