India’s inflation rate slips into negative zone (Lead)

June 18th, 2009 - 3:51 pm ICT by IANS  

New Delhi, June 18 (IANS) For the first time since the new wholesale price index (WPI) series started in 1995, India’s annual rate of inflation has turned negative, falling to minus 1.61 percent for the week ended June 6, leading to fears that this would lead to hoarding of food articles.
The inflation rate, which was 0.13 percent in the previous week, had last turned negative in 1977.

The WPI for all commodities rose 0.04 percent primarily due to a rise in the indices for non-food articles, manufactured products, and fuel, power, light and lubricants, showed data released by the commerce and industry ministry Thursday.

While the index for primary articles declined 0.7 percent, that for fuel and power rose 0.7 percent. The index for manufactured products rose 0.1 percent.

The final data for the week ended April 11 showed that the revised annual inflation rate actually stood at 0.96 percent as against 0.26 percent reported earlier based on provisional figures.

Sri Ram Khanna, the head of the commerce department at Delhi School of Economics, said “the negative inflation was expected” and attributed it to static demand and adequate supply of commodities.

He was also of the view that the inflation figures would fluctuate and would revive only during the festive season around October this year.

Dalip Kumar, head of projects at the National Council of Applied Economic Research (NCAER), a Delhi-based think tank, said the inflation rate turning negative would lead to hoarding of food commodities.

“Demand is low. Traders will now begin hoarding and black marketing food items like fruits, vegetables and cereals. The government will have to take some steps,” Kumar told IANS.

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