The inflation rate during the first quarter of fiscal year 1997-98 has showed a declining trend with annualised rate of inflation, on a point-to-point basis, at 5.9 per cent as on end June 1997, remaining almost one percentage point lower than the end March 1997 level.
The Reserve Bank, in its annual report, has said adding that as per the latest indication, the annual inflation rate fell sharply to 4.05 per cent for week ended August 2, 1997 reflecting "wearing off" of direct impact of the last July's petroleum price hike.
On the financial year basis, the increase of 1.4 per cent for the first quarter was also significantly lower than that of 2.3 per cent recorded in the comparable period of the previous year.
During 1996-97, the inflation rate, in terms of both wholesale and retail prices, remained under control in spite of price hikes on some of the administered items such as petroleum and coal, which is attributed as distinguishing feature of the price situation by the Reserve Bank of India.
The annual inflation rate measured in terms of variations in Wholesale Price Index (WPI) on point-to-point basis moved up to 6.9 per cent against 5.0 per cent during 1995-96.
On an average, it was placed lower at 6.4 per cent as compared with 7.8 per cent during the pervious year.
In respect to the variations in the Consumer Price Index for Industrial Workers during 1996-97, the relevant annual inflation rate was lower on an average basis at 9.4 per cent against the previous year's 10 per cent against 8.9 per cent during 1995-96.
According to the Reserve Banks annual report, the price situation in 1996-97 came under pressure largely from supply side factors.
The adjustment in prices of mineral oils and electricity, deregulation of coal prices and upward revision in issue prices of rice and wheat accentuated the underlying rate of inflation which is the "core" inflation from a trend cycle decomposition of a time series trend.
