Inflation rate drops, now to 6.61 percent (Second Lead)

December 26th, 2008 - 6:33 pm ICT by IANS  

New Delhi, Dec 26 (IANS) India’s annual rate of inflation continued its downward trend, dipping to 6.61 percent for the week ended Dec 13 from 6.84 percent the week before, official data released here Friday said. The wholesale price index (WPI) for all commodities declined 0.2 percent to 230.7 (provisional) from 231.1 (provisional) the previous week.

The inflation rate was 3.84 percent during the corresponding week last year.

“Inflation continues to be in single digit for seven weeks consecutively, with a small decline of 23 basis points over last week,” the finance ministry said in a statement.

“Contribution of primary articles to the year-on-year inflation rate for the week ending December 13, 2008, shows that this group accounted for 41.59 percent, as against their share of 22.03 percent to the WPI basket, while the fuel and power group has registered negative contribution,” the statement added.

The index for primary articles rose 0.1 percent to 249.2 (provisional) from 249 (provisional) the previous week.

“Prices of primary articles continue to rule high, despite the decline in overall inflation, due to the base effect,” the ministry said.

The index for fuel, power light and lubricants remained unchanged at the previous week’s level of 332.1 (provisional).

The index for manufactured products declined 0.3 percent to 201.7 (provisional) from 202.4 (provisional) in the previous week.

“The fall in inflation is related to the global slowdown due to which the commodities and oil prices have come down,” said D.K. Joshi, chief economist at credit rating agency Crisil.

“All these had earlier triggered higher rate of inflation but now the corrective prices have acted as a catalyst in decelerating inflation,” he added.

“However, we are in a phase where growth is slipping. We need to have policies that can prevent growth from slipping further,” Joshi said.

Moreover, there is little room for fiscal stimulus, he said, adding: “But we can expect more rate cuts to happen in the near future”.

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