Inflation slips 52 bps, down to 7.81%

Inflation fell to 7.81 per cent for the week ended September 4, even as the government said it was closely monitoring the situation, especially the supply of essential commodities.

The 52 basis points drop from the previous week's 8.33 per cent was despite higher prices of most commodities, barring oilseeds, and primarily on account of the high base effect.

Finance Minister P Chidambaram today said the Cabinet Committee on Prices reviewed the price situation, especially with respect to sugar and edible oils. Vanaspati was singled out for attention, in view of the forthcoming festival season.

The minister said though the year-on-year inflation measured by the wholesale price index (WPI) had fallen, "the situation requires to be carefully watched.

There are adequate stocks of all essential commodities in the country and there is no case for price increases of any essential commodity. We will ensure that there are no supply side constraints."

The cut in the import tariff value of edible oils and easing of norms for import of raw sugar would have a beneficial effect on prices. Consumers must resist efforts of retailers to increase prices in mandis, he said.

"I am not in the business of projecting inflation. Many factors are external, especially prices of petroleum products, which are not under the control of the government. The government will take measured steps on both the monetary and fiscal sides to moderate inflation," he added.

Further fall in the WPI-based inflation is expected by the middle of September, when the high base effect kicks in. In 2003, the WPI-based inflation level had crossed 5 per cent in the week ended September 20.