India’s inflation rate as measured by wholesale price index (WPI) stood at 10.72 per cent for the week ended October 25 this year, as compared to 10.68 per cent for the previous week.
The marginal increase in inflation rate was due to rise in prices of primary articles, which have 22 per cent weight in the index. However, the rate of price increase for the other two major categories- fuel and manufactured products-declined. The annual rate of inflation stood at 3.11 per cent a year ago.
Inflation of 30 essential commodities, closely watched by the government, rose marginally by 4 basis points to 7.51 per cent for the week ended October 25, 2008. Items that saw a price increase are rice, wheat, urad, potatoes, tea and salt, a press statement issued by finance ministry said.
The marginal increase in inflation rate should not cause concern, as only around a fifth of total sample is collected, while releasing the widely watched inflation number, said a government official, adding that the difference was within margin of error in collecting data.
"The Reserve Bank's policy signals inflation is no longer a concern and the focus has shifted to lifting the economy,'' said Dharmakirti Joshi, an economist with Crisil, a ratings and advisory firm. With energy and commodity prices declining, he expects inflation to slow down between 5.5 per cent and 6 per cent by March 2009.
India’s central bank, Reserve Bank of India (RBI) has reduced key lending rate by 150 basis points over the last fortnight in response to fears that Asia’s third largest economy is likely to slowdown. This has clearly signaled that RBI has now shifted its target from inflation targeting to promoting growth, economists say.
The final inflation rate for the week ended August 30, 2008 was revised upwards by 28 basis points to 12.38 per cent, as compared to provisional estimate of 12.10 per cent.
The annual rate of inflation for primary articles was at 11.41 per cent for the week ended August 30, 2008, as compared to 10.92 in the previous week. It was only 5.01 per cent a year ago. Fuel remain unchanged. Manufactured products declined to 9.09 per cent in the seven days ended August 30, 2008, as against 9.26 per cent a week ago.