Inflation plunged to an 11-year low of 3.45 per cent for the week ended October 25. The annual rate of inflation, calculated on a point-to-point basis, fell by 0.52 percentage points from 3.97 per cent in the previous week.
This relatively sharp fall in the inflation rate has been attributed to a statistical blimp. While food prices remain pegged at present levels in the current year, in the previous year they were at a peak hence the rate of growth actually declined.
In general, inflation has hit a low trend of 4-5 per cent as compared with the historical average of 7-8 per cent, largely due to depressed demand, freer imports and tight fiscal targeting by the government.
The prices of primary food articles decreased by 0.2 per cent during the week compared with a 1.8 per cent increase in the corresponding week last year. Inflation was at 6.44 per cent in the corresponding week last year.
The previous low was in 1986-87 when the annual rate of inflation fell below three per cent for one week.
Prices of primary articles and manufactured products increased by just 1.95 per cent and 2.79 per cent, respectively, during the year compared to an 11.25 per cent increase in fuel, power, light and lubricants.
This is mainly due to the massive increase in administered prices of items like petroleum products and power during the year.
Inflation based on consumer price index for industrial workers (CPI-IW) for August remained at 4.7 per cent as against 3.9 per cent based on WPI.
The commodities that fluctuated substantially during the week were, coir mats and mattings (up five per cent) and mesta (down four per cent).
The index for primary articles declined by 0.1 per cent to 339.0 from 339.4 mainly on account of decline in food articles.
The index for food articles went down by 0.2 per cent to 385.7 from 386.5 due to fall in prices of bajra and ragi (three per cent each), maize (two per cent) and fruits and vegetables (one per cent). However, prices of eggs and fish (two per cent each) and jowar, barley, gram, moong, masur and urad (one per cent each) went up.
Meanwhile, the index for all commodities (base 1981-82-100) fell marginally to 329.7 (provisional) during the week from 329.8 (provisional) the week before. Inflation based on the final index stood at 3.4 per cent for the week ended August 30 (latest available), as against 3.8 per cent, based on the provisional index.
The final index for all commodities for the week was at 325.7 compared to the provisional index of 327.1.
Economists have suggested the low levels of inflation may be due to a slackening of demand, as is evident from the relative stability in the prices of primary articles and manufactured products.
The National Council for Applied Economic Research (NCAER) is predicting inflation to pick up in the second half.
During the reference week, the index for primary articles declined marginally while the indices for manufactured products rose and fuel, power, light and lubricants remained unchanged.
The index for the other sub-group in primary articles, non-food articles, increased marginally to 344.9 from 344.8 due to a rise in prices of raw wool and copra (three per cent each) and raw silk, gingelly seed and soybean (one per cent each). Apart from Mesta the price of lac also went down by one per cent during the week.
The index for fuel, power, light and lubricants remained unchanged at 370.7 for the fifth consecutive week.
The index for manufactured products rose marginally during the week to 316.8 from 316.7. Under the group, the index for food products increased by 0.1 per cent to 324.8 from 324.5 due to increase in the price of atta (one per cent).
However, prices of coconut oil, rice bran oil and oil cakes eased by one per cent during the week.
The index for textiles went up by 0.1 per cent to 310.6 from 310.4 due to increase in prices of coir mats and mattings (five per cent), coir yarn (two per cent) and jute, hemp and mesta textiles (one per cent each). Prices of filament yarn synthetic declined by one per cent during the week.
The index for non-metallic mineral products declined by 0.3 per cent to 344.6 from 345.8 due to fall in the price of cement (two per cent). The price of sanitaryware went up by three per cent during the week.
The index for basic metals, alloys and metal products group rose to 348.9 from 348.8 due to a three per cent increase in the price of steel wires.
The index for transport equipment and parts rose by 0.2 per cent to 272.1 from 271.5 as the prices of truck chassis and bus chassis increased by one per cent each.
The indices for all other group remained unaltered at their respective previous weeks level.
