Inflation, measured by the wholesale price index (WPI), remained unchanged at 3.07 per cent for the week-ended October 13 and remained at its lowest since October 2002, despite global crude oil trading at a worrisome $92 per barrel.
Analysts, however, felt the Reserve Bank of India (RBI) was unlikely to change key rates in busy season monetary policy next week. With a series of interest rates hikes in quick succession, the RBI has quite aggressively tightened the monetary screws.
While the government has cut import duty on several items, including cement and edible oils, RBI has adopted a policy of monetary tightening via hikes in the cash reserve ratio (CRR) and the repo rate to contain the price line.
Finance Minister P. Chidambaram said in Washington recently that inflationary pressures from the supply side remain strong, but said that better supply management coupled with fiscal and administrative measures and a gradual removal of monetary accommodation have had a favourable impact on inflationary expectations. “Oil prices continue to touch record highs. The potential adverse impact of elevated oil prices on oil importing developing countries merits more focused attention than what has been given so far,” he said.
During the week-ended October 13, food items like fruits and vegetables, pulses, eggs meat and fish became expensive. Prices of flour, maida fell.
The RBI had pegged average annual inflation rate for 2007-08 at 5 per cent and said that it would be in the range of 4.0-4.5 per cent over the medium term.