Inflation remains below 4.8% for second consecutive week

Inflation remains below the psychologically worrisome 5 per cent for the second consecutive week in data released today, reports Gaurav Choudhury.

Inflation remained below the psychologically worrisome 5 per cent for the second consecutive week in data released on Friday, as improved supply of commodities coupled with a high base of last year pulled down the wholesale price index (WPI) based rate to 4.80 per cent for the week ended June 2.

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The rate was 4.85 per cent in the previous week and 4.88 per cent during the corresponding week last year.

The latest price data came barely a week after India galloped into the league of high growth economies with gross domestic product (GDP) growth of 9.4 per cent in 2006-07 with manufacturing growth at a sizzling 15.1 per cent in April this year.

During the week ended June 2, Food Articles group index declined marginally, while Non-Food Articles group index went up by 0.1 per cent.

The Fuel, Power, Light and Lubricant index also fell marginally owing to a 2 per cent dip in aviation turbine fuel and a 1 per cent decline in furnance oil.

In its slack season credit policy in the last month, 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.

With a series of interest rates hikes in quick succession, the Reserve Bank of India (RBI) has quite aggressively tightened the monetary screws.

While the government has cut import duty on several items including cement and edible oils, the RBI has a tighted money supply, raising the cash reserve ratio (CRR) and the repo rate, its short-term lending rates for banks, to contain inflation.