labels: economy - general
Inflation eases to 5.4 pc news
19 May 2007

New Delhi: Annual inflation eased below 5.5 per cent after nearly four months of firefighting by the central government.

This represents the third consecutive weekly fall in inflation.

The wholesale price index (WPI) based inflation declined to 5.44 per cent for the week ended May 5, down from 5.66 per cent the previous week.

This decline is mainly attributed to the base effect, rather than an actual easing of prices of the three commodity groups - primary articles, fuel and power, and manufactured products - that comprise the WPI.

Fears are rising that the central bank may tighten interest rates again because prices of major commodities have risen, implying that recent monetary and fiscal measures have not yielded immediate results.

Economists said prices of vegetable prices, fruits, cement prices, edible oil prices- the major contributors, were still at high levels.

An economist said he was expecting a 25 basis point hike in the repo rate in the next policy review.

The RBI had increased the cash reserve ratio by 25 basis points each on six occasions from December 23 last, with the latest hike coming into effect on April 28.

The index for primary articles increased by 0.4 per cent, with prices of eggs (8 per cent), fish-marine (5 per cent), masur (4 per cent) and fruits and vegetables (3 per cent) increasing.

Prices of condiments and spices, moong (2 per cent) and barley (1 per cent) declined. In the non-food articles category, prices of niger seed (5 per cent), sunflower (3 per cent), and raw cotton (2 per cent) declined.

 


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Inflation eases to 5.4 pc