Inflation at 3-yr low of 3 per cent

The wholesale price index-based inflation level, a measure of the general price levels in the economy, dipped to a three-year-low of 3.01 per cent in the week ended August 27, from 3.08 per cent in the previous week.

Finance Minister P Chidambaram also said inflation may accelerate in the next two or three weeks as a result of the state-owned oil companies raising fuel prices earlier this week.

"Both Reserve Bank of India and the government will take necessary steps to contain inflation," he said, adding that the headline inflation is likely to be under 5.5 per cent by March.

The 7 per cent-hike in petrol and diesel prices is expected to push up inflation. Though the first round of impact is not expected to be significant, the spill-over effect of the hike could push up year-end inflation to 5-6 per cent, said economists.

The impact of the hike in petrol prices by Rs 3 a litre and diesel by Rs 2 a litre would, however, be felt only after two-three weeks.

The dip in inflation was on account of a high base effect. Inflation in the corresponding week last year was 8.74 per cent.

The inflation level, based on the final WPI was revised upwards to 4.14 per cent from 4.09 per cent reported earlier, based on the provisional index.

At the disaggregated level, the index for primary articles rose 0.9 per cent, driven by a 1.5 per cent rise in the index for food articles. The index for non-food articles fell 0.5 per cent during the week.

The index for fuel, power, light and lubricants rose marginally, while the index for manufactured products rose 0.2 per cent during the week.