labels: economy - general
Inflation rate falls to a 5-month low of 5.27 per centnews
25 May 2007

Mumbai: The annual rate of inflation based on the wholesale price index fell for the fourth consecutive week, ending 0.17 percentage points down on May 12 at a five-month low of 5.27 per cent, even as prices of essential food items rose.

Inflation rate stood at 5.44 per cent during the previous week and 4.63 per cent during the corresponding week of the previous year.

While prices of most items in the major categories of primary articles and manufactured products were higher, inflation rate fell due mainly to the base effect of last year.

The wholesale price index (WPI), on which inflation data is based, rose 0.1 per cent to 211.7 points during the week ended May 12 from 211.4 points for the previous week.

Inflation figures are, however, calculated on the basis of price movements year-on-year.

When inflation was hovering above six per cent in the past few months, it was partly attributed to less than four per cent inflation last year.

While prices of most food products in primary articles category rose, those in manufactured category declined. As such, while prices of eggs, fruits, vegetables, milk and pulses rose, items like processed tea, flour, maida, sooji and bran turned cheaper.

If inflation continues to fall, the RBI might desist from further tightening of liquidity, analysts feel.

There was apprehension that RBI might go for another hike in the mandatory cash reserve requirements of banks to cool inflation.


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Inflation rate falls to a 5-month low of 5.27 per cent