Inflation declines to 6.39 per cent

[ross18]

Inflation declines to 6.39 per cent

Compared to the previous week's figure of 6.46 per cent, the inflation eased to 6.39 per cent for the week ended March 24 due to lower prices of some food items and manufactured products.


Although the inflation has ceased after remaining unchanged for three weeks in a row, but it’s still much higher than the annual inflation rate of 4.06 per cent recorded during the corresponding week of the previous year.


Nonetheless, inflation was way above RBI's projection of 5-5.5 per cent for this fiscal, maintaining pressure on interest rates.


Inflation might come down in weeks to come following a tight monetary policy of RBI, which had last week raised key short-term lending rate (repo) by 0.25 per cent and increased mandatory requirement of keeping cash by banks with the central bank by 0.5 per cent. The twin moves would suck out around Rs 15,500 crore from the system.


However, if it does not come down to the expected level, RBI might take further tightening measures in its annual monetary policy, slated for April 24.


While prices of tea, barley, fruits and vegetables, raw cotton among food products declined, those for urad, gram, masur, fish-inland and condiment and spices rose.


In manufactured products, oil-cakes, imported edible oils, Hessian clothes and all kinds of acid became expensive.


According to official estimates, oilseeds production is likely to be down in 2006-07 crop year (ending June, 2007) in various categories like groundnut and mustard, which are likely to further increase prices of edible oils.


However, prices of sugar, paper products, non-ferrous metals declined.

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