Inflation to moderate to 6 pc by end of this fiscal: Pranab

Top Stories

»	Indian markets trade higher despite West Asia tensions
»	Sensex, Nifty open 1 pc lower amid West Asia tensions, weak global cues
»	India clocks robust 7.7 pc GDP growth in 2025-26, Q4 growth at 7.8 pc
»	RBI keeps repo rate unchanged at 5.25 pc, maintains ‘Neutral’ stance
»	Crude oil prices fall over 1 pc as ceasefire hopes ease West Asia concerns

SME Times News Bureau | 30 Dec, 2011
With food inflation reaching to 0.46 percent, the lowest level since April 2006, Finance Minister Pranab Mukherjee Thursday said the overall inflation based on the wholesale price index (WPI) is likely to come down to around 6 percent by the end of the current financial year.

"If this trend continues, then by the end of the year the WPI inflation will he around 6 percent," Mukherjee told reporters while reacting on the weekly data.

There was year-end relief for the common man as India's annual food inflation dropped to a near six-year low of 0.42 percent for the week ended Dec 17 due to a sharp decline in the prices of onions, potatoes and vegetables, official data showed Thursday.

This is the lowest level of food inflation since April 2006. After remaining stubbornly near double-digit for almost two years, food inflation has dropped sharply in the last one-and-a-half months giving much needed relief to the common people and policy makers.

The headline inflation based on the wholesale price index was recorded at 9.11 percent in November, according to the latest available data.

Mukherjee said overall inflation was unlikely to come below 6 percent because of higher inflationary pressure in the previous weeks and months.

Onion prices are less than half when compared to their price during the corresponding period of last year. Onions have become cheaper by 59.04 percent year-on-year.

Vegetables are cheaper by 36.02 percent, while potato prices have declined by 33.76 percent year-on-year.

The sharp decline in the prices of onions and vegetables and overall food inflation is partly due to high base effect. Last year, there was sharp increase in the prices of onions and vegetables. Onion prices had risen by 58.54 percent and vegetables by 36.29 percent year-on-year for the week ended Dec 17, 2010.

Annual food inflation was at 15.48 percent in the corresponding week of last year.

Food inflation came down to single-digit in the second week of November and has dropped consistently since then. It was recorded at 10.63 percent for the week ended Nov 5 and at 1.81 percent for the week ended Dec 10.

Inflation in overall primary article, which has 20.12 percent weight in the wholesale price index, dropped to 2.70 percent for the week ended Dec 17 as compared to 3.78 percent in the previous week, according to data released by the ministry of commerce and industry.

Fuel and power inflation dropped to 14.37 percent during the week under review as compared to 15.24 percent in the previous week.

The recent drop in food inflation and easing in overall inflationary pressure may prompt the central bank to cut interest rates.

The Reserve Bank of India early this month kept policy rates unchanged after hiking the key rates 13 times since the beginning of 2010.