After rising for three consecutive weeks, headline inflation rate (also known as wholesale price index or WPI) slowed down to 0.48 per cent, mainly because of fuel prices.
Though international crude oil prices have increased in the last one month, it is still less than year-ago prices leading to nearly 0.8 percentage point decline in fuel index that accounts for 15 per cent of the WPI.
The inflation rate as measured by the WPI stood at 0.7 per cent for the previous week ended 25 April and it was 8.73 per cent for the corresponding week in 2008.
Experts believe the high base effect is pulling the inflation rate down, as the prices of food items in both primary and manufactured products category continued to be on the rise.
“It’s the base effect that has brought the inflation down,” said DK Joshi, an economist with the ratings and research agency Crisil India. “The food prices are still high and other items like pesticides and benzene have also shown a rise. Crude prices have also risen on a week on week basis,” he added.
Though the inflation rate for primary articles came down by 33 basis points to 5.64 per cent, the prices of food items like cereals, pulses and vegetables continue to rise. One basis point is one-hundredth of a percentage point.
The inflation rate of cereals and pulses, which form part of the basic consumption basket, marginally rose by around 50 basis points to 11.55 per cent and 14.82 per cent, respectively.
The price of vegetables also increased by around 3 percentage points to 18.37 per cent on a week-on-week basis.
Price of sugar also continues to be high as the inflation rate stood at 26.27 per cent from 24.66 per cent in the previous week.
Pesticides witnessed one of the highest week-on-week basis rise at 22.5 per cent.
The inflation rate of fuel group came down by 78 basis points to -6.61 per cent from -5.83 per cent in the previous week on a year-on-year basis. However, the index registered a 0.21 per cent increase on a week-on week basis
Going forward, Joshi said, “However the downward trend of the overall inflation rate will continue for 2-3 months.”
The inflation rate for manufactured category stood at 1 per cent against 1.04 per cent in the previous week.
The final inflation rate for the week ended 7 march, 2009 was revised upwards to 0.89 per cent from 0.44 per cent, an earlier provisional estimate.
