India’s inflation rate at lowest in three decades (Lead)

April 16th, 2009 - 4:26 pm ICT by IANS  

New Delhi, April 16 (IANS) India’s annual rate of inflation fell to a three-decade low of 0.18 percent for the week ended April 4, from 0.26 percent the week before, official data showed Thursday.
Inflation rate had declined for eight consecutive weeks to 0.27 percent for the week ended March 14, but marginally rose to 0.31 percent for the week ended March 21. It has continued to decline since then.

Between March 28 and April 4, the wholesale price index rose by 0.4 percent to 228.2 (provisional) from 227.3 (provisional) the week before, data released by the commerce and industry ministry showed.

Among the three main commodity groups, the index for manufactured products and primary articles rose 0.1 percent and 1.1 percent.

The index for fuel, power, light and lubricants rose 0.5 percent to 322.6 (provisional) from 320.9 (provisional) for the previous week due to higher prices of aviation turbine fuel (12 percent), naphtha (8 percent), light diesel oil (3 percent) and bitumen (2 percent).

However, the prices of furnace oil declined 1 percent. The index for this group for the previous week was at 320.9 (provisional).

Inflation rate does not necessarily mean that prices have fallen, but that the rate of rise in prices has come down — not the actual prices.

Economists have already warned of a deflation - a decline in the general price level. It is caused by factors such as low money supply and credit, and a curb in spending by households, industry or government.

D.K. Joshi, principal economist at credit rating agency Crisil, told IANS the inflation figures would have dipped to zero had the wholesale price index not risen between March 28 and April 4.

“Also, the index for fuel, power, light and lubricants has shot up. Prices of fruits and vegetable have gone up. This has helped prevent deflation for the moment,” said Joshi.

Dalip Kumar, head of projects at the National Council of Applied Economic Research (NCAER), a Delhi-based think tank, said consumers were yet to benefit from lower inflation rates.

“We have excellent production of food grains. But prices of food commodities and fruits have gone up. So while wholesale prices may have moderated, retail prices remain high.”

Kumar also doubted the accuracy of the current wholesale price index. “It doesn’t match with the ground reality.”

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