Inflation falls for 4th consecutive week

India’s inflation, as measured by the wholesale price index (WPI), fell for the fourth consecutive week mainly owing to a high base effect, but the contraction in the key price gauge is expected to halt following last week's fuel price hike. The annual, point-to-point inflation stood at (-)1.55% in the week ended June 27, 2009 compared to (-)1.30% in the previous week, the Commerce & Industry Ministry said. Inflation rate was at 12.03% during the week ended June 28, 2008.

It may be recalled that the Government raised the price of petrol and diesel by Rs4 per litre and Rs2 a litre, respectively with effect from July 1 in line with the recent spurt in crude oil prices. However, the prices of politically sensitive kerosene and LPG were left untouched. Media reports soon after the fuel price hike suggested that prices of essential commodities, particularly that of food articles, could spike as transporters and truck operators were likely to raise their freight rates.

Aside from the recent increase in the price of petrol and diesel, the other worrying aspect is the frequent upward revision being done by the Government. Today, the Commerce Ministry said that it was revising inflation rate for the week ended May 2, to 1.48% from its preliminary estimate of 0.48%. The WPI for the same period stood at 233.9 compared to the provisional forecast of 231.6.