Inflation falls below 10%...hits six-month low

India's wholesale price based inflation fell to a six-month low in July, slipping below the double-digit mark, the Government. This might give some flexibility to the Reserve Bank of India (RBI) in formulating monetary policy, especially if inflation moderates further next month. Inflation, as measured by the wholesale price index (WPI), stood at 9.97% last month as against expectations of a 10.4% rise. It was also down from June's number of 10.55%. The annual rate of inflation stood at (-)0.54% during the corresponding month of the previous year.



Build up inflation in the financial year so far was 3.59% compared to a build up of 4.60% in the corresponding period of the previous year, the Government said. But, the annual inflation rate for May was revised up to 11.14% from 10.16%. The official Wholesale Price Index (WPI) for 'All Commodities' for July 2010 rose by 1% to 262.5 from 259.8 for the previous month. Inflation in the Primary Articles group stood at 14.94% in July as against 16.28% in June. It was 7.64% in the same month last year. The WPI for this major group rose by 1.9% to 307.7. Inflation in the Fuel & Power group was at 14.29% last month versus 14.32% in June. It was at (-)10.37% in the corresponding period of last year. The IPO for this group rose by 3.2% to 386.4. Inflation in Manufactured Products group stood at 6.15% compared to 6.66% in July 2009. It was at 0.10% in the year-ago period. The WPI for this group declined by 0.1% to 219.2. Inflation in Food Articles group fell to 10.29% from 14.60% in June. It was at 14.16% in the same month last year. The WPI for Food Articles group rose by 0.9% to 297.9.

Inflation in Non-food Articles group rose to 21.05% from 18.59% in June. It was at (-)3.32% in the year-ago period. The WPI for Non-Food Articles group rose by 0.8% to 288.7. Inflation in the Minerals Group jumped to 52.69% from 28.50% in June. It was at (-)13.99% in the corresponding month a year earlier. The WPI for Minerals group rose by 19.2% to 861.8. Ten-year government bond yields declined three basis points to 7.82% in Mumbai after the release of the inflation figures while the price fell 6 paise to Rs99.82. The BSE Sensex slid 116 points to end at 18,050 while the NSE Nifty declined 34 points to close at 5418.