India’s inflation drops further to 8.9 percent (Lead)

November 20th, 2008 - 4:13 pm ICT by IANS  

New Delhi, Nov 20 (IANS) Helped by a drop in prices of fuels and manufactured products, India’s annual rate of inflation fell further to 8.9 percent for the week ended Nov 8, from 8.98 percent for the week before, fresh data showed Thursday. The fall in inflation rate was the result of a 0.2 percent drop in the official wholesale price index (WPI) during the week. The index for fuels fell by 0.9 percent, while that for manufactured goods declined 0.2 percent.

The statistics released by the commerce and industry ministry also pointed out that the index for primary articles, which has a weight of 22.02 percent in the general index, rose by 0.4 percent during the week under review.

The annual rate of inflation stood at 3.2 percent during the corresponding week last year.

Inflation fell sharply to 8.98 percent - to a single digit after 21 weeks - for the week ended Nov 1 from 10.72 percent for the week before.

The fresh statistics on inflation has come at a time when as many as six states are going for assembly elections since Nov 14, for which opposition parties had made rising prices their main political plank against the government’s policies.

Economists said they had predicted the inflation rate to fall because of a number of reasons, including the fall in fuel prices, the tight monetary policy adopted by the central banks in recent months and supply-side actors.

“The concern now is not the inflation. It will come back to normal by the middle of the next year,” said Shri Ram Khanna, head of the Commerce Department at the Delhi School of Economics.

“The most important thing that will drive our economy now is how developed countries stabilise their financial sectors and the markets,” Khanna told IANS.

He, however, said the retail prices of commodities would not fall immediately just because inflation has come down. “Interest rates are still high and purchasing power will increase only with increased consumer demand.”

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