Falling food prices pull inflation down to 5.06%

Inflation fell for the fifth straight week to 5.06%, its lowest in seven months, as prices of food items eased taking pressure off the government and Reserve Bank to tighten fiscal and monetary policies.

This was the first time in many months that the inflation rate -- at 5.06% for the week ended May 19 -- moved close to the year ago level of 5.05%.  The inflation numbers had stood at 5.27% in the seven days preceding the week under review.

Inflation declined despite rising of all the major indices, which determine it, due to base effect. In fact, the aggregate Wholesale Price Index went up 0.1% to 211.9 points during the week from 211.7 points a week ago.

At specific levels, food articles group index rose 0.1%, non-food articles group index 0.3%, minerals index 0.1%, fuel, power, light and lubricants index 0.1% and manufactured products index 0.1%.

But the inflation fell because price movements are compared with those of corresponding period last year. And on high inflation base of 5.05% last year, even rising prices resulted in inflation of 5.06% for the week under review.

Prices of some food articles declined -- cereals 0.2%, pulses 0.4%, processed tea by 9%, khandsari 4%, sugar 2%, butter and gur 1% each.

On the other hand, malted food was more expensive by 15%, vegetables by 1.1% and fruits by 0.5%.