After rising slightly to 10.72% for the week ended October 25, inflation once again has dipped to 8.98% for the week-ended November 01 office of economic adviser, Ministry of Commerce informed.
The latest released Whole Sale Price (WPI) index has shown that the inflation rate for November 1, 2008 has declined sharply to single digit after 21 week. This is a welcome news for the UPA government and RBI, which were trying hard to curb the inflation.
The Inflation, as measured by office of economic adviser, dipped sharply by 1.74% as against previous week’s data on the back of cooling crude oil price at international level that has reached to below $55 per barrel from $165 per barrel in July.
The prices of naphtha, jet fuel, furnace oil and light diesel oil have declined sharply by 33%, 18%, 13% and 6% respectively while the index for essential 30 commodities have gone upwards 7.74% from last week’s 7.51%.
Among 30 commodities, the prices of nine items including rice, jowar, arhar, masur, potatoes mutton and gur became costlier while the prices of five items including tea, ragi, urad, and condiments & spices have declined, the WPI index said, by adding that the prices of 16 commodities remained unchanged.
In non-food item group, the prices of raw rubber and groundnut seed declined by 2% and 1% respectively while the prices of iron ore become softened by 8%.
Speaking over the latest WPI data release, Union Finance Minister P Chidambaram on Thursday in the capital said that in the ‘primary articles’ group, out of a total of 98 articles, 20 articles including wheat, maize, urad, ragi, papaya, brinjal, okara, peas, sweet potatoes, sapota, groundnut, gingelly and castor seeds, dry chillies, corriander, cardamoms, tea, iron ore and raw rubber have shown a decline in prices while another 61 articles have shown no increase in prices.
In the commodity group ‘fuel and power’, the prices of four commodities declined and other 14 commodities remained unchanged and the group registered a cumulative depreciation to 9.22 per cent in the current week compared to an inflation of 14.09 percent reported in the previous week, added Chidambaram.
In the ‘manufactured product’ group, out of 318 commodities, a large number, 284 in all, have shown no increase in prices, 23 commodities became cheaper while only 11 products, particularly groundnut cake, cattle feed, ceramic tiles, kraft paper, heavy & light structurals, blasting powder, tooth paste, gur, ball bearings and wires witnessed an increase in prices, said FM.
This latest released WPI data is likely to bring huge relief to UPA government in this election year while for RBI, it is the best opportunity for it to further ease the monetary policy and give some relief on the interest rate.
According to experts, RBI may now ease Repo Rate, Cash Reserve Ratio (CRR) and Reverse Repo Rate by 50 to 100 bps to boost the financial sector and to pump liquidity in the system.
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