Inflation down to 5.66 pc

Updated on May 12, 2007 02:08 AM IST
Inflation falls amid signs of narrowing of the demand-supply mismatch for agricultural produce, reports Gaurav Choudhury.
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None | ByGaurav Choudhury, New Delhi

Inflation fell for the second consecutive week, reaching a level of 5.66 per cent for the week that ended on April 28 amid signs of narrowing of the demand-supply mismatch for agricultural produce in the current rabi marketing season.

While prices of cereals declined by 0.2 per cent, the price of wheat fell by 1 per cent. Wheat production in 2006-07 is estimated to be around 73.7 million tones, compared with 69.35 million tones the previous year.

Finance Minister P Chidambaram had identified the supply-demand mismatch in essential articles as one of the major reasons for the rise in inflation.

The government has taken a series of fiscal and monetary measures such as cutting the excise and custom duties on various commodities to ease the supply situation. The Reserve Bank of India (RBI) has also taken steps to control prices through monetary instruments.

According to the latest weekly data, prices of sugar also declined by 1 per cent with a bumper harvest of 26.5 million tonnes expected during the current season. Sugar production was 19.5 million tonnes last year.

Besides the demand-supply mismatch for essential commodities, the government feels that the global rise of commodity prices, including crude oil; the rise in public expenditure because of the government’s flagship programmes; the high demand fed by rapid growth; and large capital inflows are the other major reasons for the rise in the price line.

The prices of pulses, however, continued to grow with the price of moong rising by 2 per cent, while those of masur and arhar both rising by 1 per cent.

Significantly, the prices of vegetables have declined by 0.7 per cent, a significant turnaround from the 23 per cent rise in the previous reported week.

Prices of certain items within the manufactured category also remained high, particularly those of bread and biscuits, which increased by 4 and 3 per cent, respectively.

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