Inflation rises marginally to 0.26%

The rising prices of food, vegetable, rubber and edible oil have turned the momentum of inflation from southward to northward, according to latest release data of wholesale price index (WPI).

The annual rate of inflation, calculated on point-to-point basis, stood at 0.26% for the week ended April 11 as against 0.18% for the week ended April 04, 2009. It was at 7.95% during the corresponding week last year.

The eight basis point increment in inflation has been held due to high commodity prices including tea (5%), bajra and jowar (3% each), fruits & vegetables (2%), raw rubber (10%) and groundnut seed (3%), edible oil (5%) and oil cakes (3%), resins (4%), building bricks (3%) and zinc (2% each).

Though this week the inflation went upward, but economists believe that India may soon witness the negative growth of inflation that can continue to 2-3 months.

The Chief Statistician Pranab Sen in March had said that India could witness “disinflation” – the negative growth in inflation, not deflation – decline in general price levels, often caused by a reduction in the supply of money or credit as Indian economy infrastructure is still robust.

Recently, the Reserve bank of India (RBI) has announced another round of cut in interest rate of short-term lending and borrowing which would provide further scope to banks to cut the credit and deposit rates.

The 25 basis point cut in repo and reverse repo by RBI would motivate the banks to reduce the consumer and retail loans, and term-end deposit rates.

The final index for annual rate of inflation for all commodities calculated on point-to-point basis stood at 3.18% for the week ended for February 14, 2009 as against 3.36% (Provisional) reported earlier vide press note on February 26.