Base effect pulls down inflation further

India's inflation, as measured by the wholesale price index (WPI), fell to its lowest level in six-and-a-half years in the last week of February partly due to high base of last year, data released by the Government showed. The annual rate of inflation, calculated on a point to point basis, stood at 2.43% for the week ended Feb. 28 compared to 3.03% in the previous week, the Commerce & Industry Ministry said today. Inflation was forecast to come in at 2.3%. It was at 6.21% during the year-ago period. This continues a progressive deceleration in inflation beginning the end of October, barring a two-week aberration in January. Such a low rate was earlier recorded in July 2002, when inflation stood at 2.5%. The index for "All Commodities" rose by 0.04% to 227.7 from 227.6 in the previous week.

For the week ended January 3, the annual rate of inflation stood at 5.33% as compared to the provisional estimate of 5.24% reported earlier, while the final WPI for the same period was 229.2 versus the preliminary forecast of 229.0.

In "Primary Articles", inflation decreased to 5.8% in the week under reference as against 6% in the previous week. In "Food Articles", inflation remained stable at 8.3% in the current and previous weeks, but sub-groups such as Fruits & Vegetables, Condiments, Spices and other food articles have recorded an increase in the price relative to the previous week. In "Non-food Articles", inflation fell to 1.3% from 1.7% in the previous week, while in ‘Minerals’, the rate of inflation remained steady at (-) 1.2% since the week ended February 14.

In "Fuel & Power", prices continued to decline, at (-) 5.1% vis-à-vis (-) 4% last week, mainly on account of a fall in non-administered oils. In "Manufactured Products", inflation rate decreased to 4% in the last week of February, from 4.5% last week. Within this group, notably Edible Oils, Basic Heavy Organic & Inorganic Chemicals as also Non-ferrous Metals depict a progressive decline in prices at (-) 8.3%, (-)11.2%, (-) 20.8% and (-) 9.7%, respectively. Iron & Steel has finally registered a negative rate of inflation of (-) 0.2%.

Inflation in the Food Index for the week ended February 28 declined marginally to 7.5% from 7.7% last week on account of a fall in Manufactured Food Products.