labels: economy - general
Inflation rate a shade lower at 6.39 per centnews
05 April 2007

Mumbai: The annual rate of inflation based on the wholesale price index (WPI) eased to 6.39 per cent for the week ended March 24 after remaining static at 6.46 per cent for three weeks in a row earlier.

Inflation eased due mainly to lower prices of food items as also some manufactured products.

While prices of tea, barley, fruits and vegetables, raw cotton among food products declined, those for urad, gram, masur, fish-inland and condiment & spices rose.

In manufactured products, oil-cakes, imported edible oils, hessian clothes and all kinds of acids became expensive.

According to official estimates, oilseeds production is likely to be down in 2006-07 crop year (ending June 2007) in various categories like groundnut and mustard, which are likely to further increase prices of edible oils.

However, prices of sugar, paper products and non-ferrous metals declined. .

Yet, inflation was way above RBI's projection of 5-5.5 per cent for the current fiscal and from a year-ago figure of 4.06 per cent, keeping up pressure on interest rates.

Inflation is expected to come down in weeks to come, following tighter monetary policy of RBI, which had last week raised key short-term lending rate (repo) by a quarter per cent and increased mandatory requirement of keeping cash by banks with central bank by 0.5 per cent. The twin moves would suck out around Rs19,500 crore from the system.

However, if it does not come down to the expected level, RBI might take further tightening measures in its annual monetary policy, slated for April 24.

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Inflation rate a shade lower at 6.39 per cent