Inflation declines to 5.38%

Inflation declined for the fourth straight week ended May 21 to 5.38% mainly due to cheaper primary articles, including food and fuel products, even as fears of an imminent price hike in fuels looms large.

The point-to-point wholesale price index (WPI) inflation declined by 0.17% from the previous week's level of 5.55% and it was 5.20% in the year ago period.

WPI fell by 0.1% to 192 points even as heavy weighted manufactured products' prices remained unchanged for the second consecutive week. The index was 182.2 points in the year ago period.

Oil PSUs, so far, have not raised the prices of petroleum products, a move, which analysts fear, could spurt inflation, even as government is toying with the idea of withdrawing the export incentive duty drawback scheme for oil sector to absorb part of the steep fuel price hike that appears to be imminent.

During the week in review, world oil prices were range bound to touch $47 a barrel amid higher US crude stocks, a continuing strike at French energy giant Total and speculation of an OPEC production cut.

Government revised upwards inflation to 5.10% during the week ended March 26 as compared to the provisional estimate of 5.05%.

WPI stood corrected at 189.5 points during the last week of 2004-05 against provisional level of 189.4 points.

The index of primary articles' group, which is the second heaviest in the WPI basket, was down by 0.1% to 188.7 points due to cheaper food and non-food articles and the index was 187.2 points a year-ago period.

Food articles' group index declined by 0.2% to 190.6 points due to lower prices for beef and buffalo meat (11%), fish-marine (2%) and masur, condiments and spices, and bajra (1% each), even as eggs became costlier by 2%.

The index of non-food articles' group fell by 0.1% to 179.1 points owing to cheaper fodder (3%), gingelly seed and soyabean (2% each) and copra (1%).

However, prices moved up for raw rubber (3%), and niger seed and raw tobacco (1% each).

Fuel, power, light and lurbricants' group index was down by 0.1% to 293.1 points due to 2% fall in the prices of naphha but furnace oil became costlier by 1%. The index was 264.4 points in the previous year.

The index for manufactured products' group, the heaviest in the WPI basket, stood firm at the previous week's 170.6 points despite cheaper food products, textiles, chemicals and machinery and the index was 162.2 points a year-ago period.

Food products' group index was down by 0.2% to 173.7 points due to lower prices of gingelly oil (2%) and coconut oil, sunflower oil, sugar and ghee (1% each).

However, prices rose for salt (2%) and oil cakes and khandsari (1% each).