Mumbai: The annual rate of inflation based on the wholesale price index declined marginally to 12.40 per cent for the week ended 16 August, down 0.23 percentage points from 12.63 per cent in the previous week.

The decline, which has not been anticipated, is attributed mainly to a drop in fuel and power prices and the prices of primary articles remaining unchanged.

The annual rate of inflation stood at 3.99 per cent as of 18 August 2007.

The prices of moong (3 per cent), condiments and spices (2 per cent) and tea, masur and urad (1 per cent each) have gone up. However, the prices of mutton and maize (-1 per cent each) declined.

The index for fuel, power, light and lubricants group declined by 1.1 per cent due to lower prices of naphtha (-9 per cent) and furnace oil (-6 per cent). However, the prices of bitumen (2 per cent) moved up.

Index for manufactured goods also rose marginally by 0.1 per cent. The index for food products rose marginally by 0.2 per cent due to higher prices of sugar (4 per cent) and khandsari (1 per cent).

However, prices of imported edible oil and rice bran oil (-3 per cent each), oilcakes (-2 per cent) and groundnut oil, cotton seed oil and sunflower oil (-1 per cent each) declined.
 
The index for base metals, alloys and metal products rose 0.1 per cent due to higher prices of foundary pig iron, basic pig iron and MS bars and rounds (1 per cent each).

However, the prices of lead ingots (-7 per cent) and zinc ingots and other iron steel (-1 per cent each) declined. 

The index for `textiles` group rose 0.3 per cent  due to higher prices of other cotton yarn (6 per cent), cotton grey cloth and canvas (4 per cent) and hessian and sacking bags and hessian cloth (1 per cent each).

Prices of 30 essential commodities, after remaining range bound between 5.7 per cent and 6.7 per cent for 19 weeks in the current financial year, increased from 6.74 per cent as of 9 August 2008 to 7.24 per cent on 16 August.

The prices of essential commodities group comprising cereals, pulses, edible oils, sugar and other products rose due to an increase in prices of sugar, pulses (moong, masur, urad and gram) and dry chillies.

The government had expected the inflation rate to hit 13 per cent and thereafter start moderating from December, before settling at 8-9 per cent by the end of the fiscal year in March 2009.

The government`s fiscal and monetary measures seem to have so far failed to tame the rising prices even as analysts expect the Reserve Bank of India to announce a further tightening of its monetary policy.