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Inflation declines to 6.39 pc

Inflation eased to 6.39 per cent and is way above RBI's projection of 5-5.5 per cent, keeping up pressure on interest rates.

business Updated: Apr 05, 2007 14:11 IST

After remaining static at 6.46 per cent for three weeks in a row, inflation eased to 6.39 per cent for the week ended March 24 due to lower prices of food items and some manufactured products.

Nonetheless, inflation was way above RBI's projection of 5-5.5 per cent for this fiscal and from a year-ago figure of 4.06 per cent, keeping up pressure on interest rates.

Inflation might come down in weeks to come, following tighter monetary policy of RBI, which had last week raised key short-term lending rate (repo) by a quarter per cent and increased mandatory requirement of keeping cash by banks with central bank by 0.5 per cent. The twin moves would suck out around Rs 19,500 crore from the system.

However, if it does not come down to the expected level, RBI might take further tightening measures in its annual monetary policy, slated for April 24.

While prices of tea, barley, fruits and vegetables, raw cotton among food products declined, those for urad, gram, masur, fish-inland and condiment & spices rose.

In manufactured products, oil-cakes, imported edible oils hessian clothes and all kinds of acids became expensive.

According to official estimates, oilseeds production is likely to be down in 2006-07 crop year (ending June, 2007) in various categories like groundnut and mustard, which are likely to further increase prices of edible oils.

However, prices of sugar, paper products, non-ferrous metals declined.

First Published: Apr 05, 2007 13:43 IST