Headline inflation as measured by the wholesale price index (WPI) stood at 12.4 per cent for the week ended August 18, as compared to 12.63 per cent a week earlier.
This is the first time the rate of increase in wholesale prices has fallen in more than six months.
The slower-than-expected growth of WPI is mainly because of lower prices of minerals and fuels. However, the prices of 30 essential commodities closely monitored by the government increased by 50 basis points to 7.24 per cent in the current week due to increase in prices of sugar, pulses and dry chillies.
“There are some early signs of moderation of inflation,” a finance ministry statement said.
Responding to rising inflation, the United Progressive Alliance government has initiated several steps like export restrictions, increase in export duty and ban on futures trading to control the prices of specific commodities. In addition, the Reserve Bank of India (RBI) too increased the repo rate, the rate at which it lends to commercial banks, and the cash-reserve ratio (CRR). “This is an indication of inter-week volatility. For a clear trend to emerge, we will have to wait for sometime. The positive thing is that globally many prices have come off their highs following very large scale demand distraction,” said Saugata Bhattacharya, vice-president, Axis Bank.
On an annual point-on-point inflation, primary articles declined to 11.63 per cent in the week ended August 18, as against 11.83 per cent in the previous week. Fuel and power also fell by 123 basis points to 17.99 per cent in the current week. However, the rate of inflation went up for manufactured products to 11.02 per cent.
The final WPI for the week ended June 21 was revised upwards to 237.7 as against 237.1 in the provisional estimate. This increased the inflation rate to 11.91 per cent, as against 11.63 per cent reported earlier.
The extent of the latest revision, the difference between provisional and final numbers, is showing a decline in the last few weeks. While the latest revision is to the extent of 29 basis points, previous revisions were higher.
Bhattacharya said the latest upward revision was on account of the June hike in fuel prices coming into play for manufactured products.
