Inflation decines to 5.9%

Indian Annual rate of inflation, year-on-year, declined to 5.9 per cent for the week ending December 27, 2008 compared to 6.4 per cent reported in the previous week, showing a decline of 47 basis points, says a Finance Ministry communique.

Inflation has consistently been on the decline for three months now and stands slightly above the rate of 5.7 per cent in the week ended February 23, 2008.

Inflation by Commodity groups

Commodity group-wise examination of year-on-year inflation shows that inflation in all groups has recorded decline.

i.In ‘primary articles’, the rate of inflation decreased to 11.6 per cent, compared to 12.1 per cent reported last week. Within primary articles, inflation rate in all its three sub-groups of food and non-food articles and minerals have declined together for the first time in the current week. Inflation rate in food articles at about 10% represents a decline after 5 consecutive weeks of increase in the rate, while the inflation rate in minerals have gradually decelerated to 40 % in the current week from its peak rate of 54.5 % in October.

ii.In ‘fuel and power’, the rate of inflation has remained unchanged at (-) 0.7 per cent.

iii.In “manufactured products”, the inflation rate decreased to 6.2 per cent, compared to 6.8 per cent in the last week.

For the combined food index (weight = 25.43 per cent), the year-on-year inflation in the week ended December 27, 2008 was lower at 8.5 per cent compared to 8.8 per cent last week.

Contribution of Commodity groups

Contribution of primary articles to the year-on-year inflation rate for the week ending December 27, 2008 show that this group accounted for 44.2 per cent, as against their share of 22 per cent to the WPI basket.

Deseasonalised monthly WPI inflation

The deseasonalised overall WPI inflation show a continuing decline which began from July 2008. It has turned negative since September 2008 at (-) 3.2 per cent, (-) 9.6 per cent in October, (-) 18.1 per cent in November and (-) 13.5 per cent in December 2008. An identical pattern of decline from July 2008 and negative from September is manifest in the deseasonalised rate of inflation for manufactured products.