Thursday, April 17, 2008

Inflation slips to 7.14%

The wholesale price index declined for the first time in 8 weeks to 7.14% for the week ended Apr. 5, 2008 as against 7.41% in the previous week.

The inflation rate was 6.44 per cent a year ago. The wholesale price based inflation declined on account of easing of prices of fruits, gur and certain edible oils. The prices of vegetables, tea, pulses and coconut oil, however, continued to rise during the reporting week. In the non-food category, th e prices of steel alloys and aviation turbine fuel too remained firm.

The chief economist of HDFC Bank Mr Abheek Barua attributed the decline to "direct fiscal steps taken by the government to check prices...rate of increase in prices in a number of food and manufactured items like edible oil, iron and steel have come down ." Part of the decline, he added, could be attributed to base effect as the annual rate of inflation for the corresponding week last year was quite high at 6.44 per cent. The Reserve Bank, Mr Barua said, may tighten monetary policy by hiking Cash Reserve Ration (CRR) as the inflation rate is still higher than its comfort level of 5 per cent.

The RBI is slated to announce its annual credit policy on April 29 amid assurance by Finance Minister Mr P Chidambaram in the Lok Sabha that the central bank would assess the situation and take appropriate steps to control money supply.

No comments: