India’s inflation rate as measured by the wholesale price index (WPI) was 10.72 per cent for the week ended October 25, compared with 10.68 per cent for the previous week.
The marginal increase was due to rise in prices of primary articles, which have 22 per cent weight in the index. However, the rate of price increase in the other two major categories, fuel and manufactured products, declined. The annual rate of inflation stood at 3.11 per cent a year ago.
Prices of 30 essential commodities closely watched by the government rose marginally by 4 basis points (one basis point is one-hundredth of a percentage point) to 7.51 per cent. Items whose prices rose are rice, wheat, urad, potatoes, tea and salt, a finance ministry statement said.
The marginal increase in the inflation rate should not cause concern as only around a fifth of the total sample is collected while releasing this widely watched inflation number, said a government official, adding that the difference was within the margin of error while collecting data.
“The Reserve Bank of India’s (RBI’s) policy signals that inflation is no longer a concern and the focus has shifted to lifting the economy,” said Dharmakirti Joshi, an economist with Crisil Ltd, a ratings and advisory firm. With energy and commodity prices declining, he expects inflation to slow between 5.5 per cent and 6 per cent by March 2009.
The RBI has reduced its key lending rate by 150 bps over the last fortnight in response to fears that Asia’s third largest economy is slowing. This has clearly signaled that the RBI has now shifted its focus from inflation to promoting growth, economists say.
The final inflation rate for the week ended August 30, 2008, was revised upwards by 28 basis points to 12.38 per cent as compared with the provisional estimate of 12.10 per cent.
The annual rate of inflation for primary articles was 11.41 per cent for the week ended August 30, 2008, compared with 10.92 per cent in the previous week. It was only 5.01 per cent a year ago. Fuel prcies remained unchanged. Manufactured products declined to 9.09 per cent in the seven days ended August 30, 2008, as against 9.26 per cent a week ago.
