Inflation falls for sixth straight week

India's benchmark inflation, as measured by the wholesale price index (WPI), stood at -1.17% in the week ended July 11, as compared to -1.21% in the previous week, the Government said. Inflation was at 12.13% during the week ended July 12, 2008.

The Government also announced that it has revised inflation for the week ended May 16 to 1.65% from the preliminary forecast of 0.61% while the WPI for the same period stood revised at 234.6 as compared to 232.2. This is the fifth consecutive week in which provisional data was revised upwards by more than one percentage point.

The WPI for 'All Commodities' for the week ended 11th July rose by 0.1% to 236.7. The index for 'Primary Articles' group rose by 0.7% to 260.3 while the index for 'Food Articles' group rose by 0.9% to 255.9 and the index for ‘Non-Food Articles’ group rose by 0.3% to 238.4. The index for 'Fuel & Power' group rose by 0.1% to 338.4 while the index for 'Manufactured Products' group declined by 0.1% to 205.9.

The All-India Consumer Price Index (CPI) for Agricultural Labourers and Rural Labourers for June 2009 increased by 9 points each to stand at 484 points for both the series. The point to point rate of inflation based on the CPI-AL and CPI-RL increased from 10.21% in May 2009 for both the series to 11.52% and 11.26% respectively during June. Respective rates of inflation during June 2008 were 8.77% and 8.75%.

The wide divergence between different measures of inflation will complicate monetary policy. The Government is working on revamping the inflation series by incorporating more commodities in WPI and updating the base years of both CPI and WPI, which should be available soon. The biggest reason for the divergence is that food prices have a higher weighting in CPI as compared to WPI. Food price inflation is currently running at 9%.