Inflation dips to 6.73%

Wholesale price index (WPI)-based inflation fell for the third consecutive week, touching 6.73 per cent during the week-ended December 11 indicating a slowdown in inflation. WPI was last seen at less than 7 per cent in mid-July.

The fall in the inflation level was primarily due to cheaper vegetables and fuels. Inflation was 7.02 per cent in the previous week and 5.8 per cent in the corresponding week last year.

"The underlying inflation in manufacturing has not changed much, while the dip in vegetable prices is seasonal. Other items in primary articles like foodgrains have not shown any dip in prices," said Saumitra Chaudhuri, Economic Advisor, ICRA.

The Reserve Bank of India's (RBI's) report, Currency and Finance, 2003-04, released yesterday, had said the uptrend in prices was expected to moderate with the easing of oil prices, improved rabi crop prospects and reduction in money supply.

In a mid-term review of its annual policy in October, the RBI had revised its inflation projection to around 6.5 per cent, assuming no major supply shocks and manageable liquidity conditions.

The inflation level based on the final index for the week ended October 16 was revised upwards to 7.21 per cent as against 7.1 per cent reported on the basis of the provisional index.

At a desegregated level, the index for primary articles fell by 1 per cent during the week, while that for non-food articles fell 0.2 per cent.

The index for fuel dipped 0.1 per cent while the index for manufactured products rose by 0.1 per cent. Within the group, edible oil prices fell by over 2 per cent while salt prices rose 4 per cent during the week.