India’s annual rate of inflation moderates to 11.44 percent (Lead)

October 16th, 2008 - 7:47 pm ICT by IANS  

New Delhi, Oct 16 (IANS) India’s annual rate of inflation has moderated to 11.44 percent for the week ended Oct 4, coming as a big relief to the government that is grappling with the aftermath of a global meltdown.Inflation has been on a moderating track since the week ended Sep 20 when the wholesale price index (WPI) put the rise in prices at 11.99 percent; it was 11.8 percent for the week ended Sep 27.

The finance ministry, which Thursday decided to release Rs.250 billion to finance farm loan waiver to improve liquidity, said inflation was at 3.32 percent a year ago for the week ended Oct 4.

“Wholesale Price Index during the week also declined by 0.46 percent from 240.7 as on September 27, 2008 to 239.6 on October 4, 2008. Inflation in the same period in the previous year at 3.32 percent, however, was significantly lower,” the ministry said in a statement.

The WPI data released by the ministry of commerce and industry showed an increase of 0.2 percent in the index for primary articles such as fruits and groundnut seeds over the past week.

The index for fuel, power, light and lubricants however declined 1.1 percent due to lower prices of naphtha (11 percent), aviation turbine fuel (6 percent) and furnace oil (5 percent), while that of manufactured products such as mustard oil and textile items fell 0.5 percent.

The final data for WPI for the week ended Aug 9 showed that the inflation rate was actually 12.82 percent, as against 12.63 percent based on the provisional statistics.

Former Reserve Bank of India (RBI) Governor C. Rangarajan, who also chaired the Prime Minister’s Economic Advisory Council till recently, has forecast the inflation rate to moderate to 10 percent by December.

Said Anjan Roy, economic adviser to a leading industry chamber: “Given the trends, we expect inflation to moderate to single digit shortly.”

“By the end of current fiscal, I foresee inflation moderating to the single digit,” said Roy, who is with the Federation of Indian Chambers of Commerce and Industry (Ficci).

He attributed the decline in inflation to moderation in oil and food prices across the world. Global crude prices fell below the $75 per barrel-mark Thursday.

The finance ministry said out of a total of 98 food articles, 17 articles including wheat, maize, and potatoes have shown a decline in prices in the current week as compared to Sep 27.

“In the case of manufactured products, rate of inflation in the current week declined to 9.69 percent, as compared to 10.33 percent in previous week,” said the ministry.

The International Monetary Fund (IMF) last week predicted an eight percent growth for India’s $1.2 trillion economy this fiscal that ends March 31, 2009. The country has logged a nine percent growth in the past four years.

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