Inflation declines to 8.9%

Annual rate of inflation, year on year as conventionally measured, declined to 8.90 per cent for the week ending November 8, 2008 compared to a rate of 8.98 per cent reported in the previous week, the Finance Ministry has reported.

The Wholesale price index in the current week declined by 0.21 per cent, from 235.5 as on November 1, 2008 to 235.0 on November 8, 2008. For the second week in a row inflation continues to be in single digit, though the significant decline of 174 basis points witnessed last week has been moderated to 8 basis points. In the previous year, on November 10, 2007 inflation at 3.20 per cent was significantly lower.

In the ‘primary articles’ group, the annual point-to-point inflation increased to 11.66 per cent, as compared to 11.01 per cent reported last week. Out of a total of 98 articles, 14 articles have shown a decline in prices in the current week as compared to November 1, 2008. These included among others, jowar, maize, ragi, tea, brinjal, black pepper, linseed, coconut fresh, papaya, rape and mustard seed, raw cotton, banana, fire clay and gypsum. A total of 55 articles have shown no increase in prices.

In the commodity group ‘fuel and power’, the rate of inflation declined further to 8.21 per cent in the current week compared to an inflation of 9.22 per cent reported in the previous week. Prices of 4 commodities declined and, for other 14 commodities, it remained unchanged. Prices of bitumen, continues to increase by 1.24 per cent in the current week.

In the case of ‘manufactured products’, rate of inflation in the current week declined marginally to 8.02 per cent, as compared to 8.06 per cent in previous week. Out of 318 commodities, a large number, 287 in all, have shown no increase in prices over the last week. For 21 commodities, there has been a decline in prices. These commodities included among others, sugar, gur, bar and rods, imported edible oils, deoiled cake, rape and mustered cake, groundnut cake and oil, rice bran oil, synthetic yarn, texturised yarn, zinc ingots, bright bars, P.V.C. resins and benzene. Only 9 products, particularly fluorescent tubes, cotton yarn and cotton cloth, bicycles, GLS lamps and mustered oil witnessed an increase in prices.

Inflation of 30 essential commodities declined marginally to 7.60 per cent as of the week ending November 8, 2008 from 7.74 per cent reported in the earlier week. There was a however, an increase in the prices of primary essential commodities including pulses such as urad, moog, gram, arhar, masoor, and cereals like wheat, rice, and bajara . There was also an increase in the prices of onions. The prices of other essential commodities moderated or declined over previous week.

The monthly deseasonalised inflation rate has been negative during September and October, suggesting a continuing moderation in WPI inflation in the coming months. For the month of October 2008, the deseasonalised inflation for primary food showed some increase, though there was significant decline in inflation rate of manufactured food. The overall monthly deseasonalised inflation in manufactured products shows a continuing decline since September 2008.