New Delhi: Declining fuel prices pushed down inflation sharply for the sixth consecutive week to 6.84%, the lowest in nine months, a development that could prompt the Reserve Bank of India to take more bold steps to boost economic growth.
Inflation dipped by 1.16 percentage points from 8% in the previous week, primarily on account of reduction in prices of petrol and diesel announced by the government in the first week of the month.
It was 6.21% in the week ended 1 March 2008. The rate during the corresponding period last year was 3.84%.
The government reduced the per litre prices of petrol and diesel by Rs5 and Rs2 respectively with effect from 6 December in the wake of falling prices of crude oil in the international market.
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Also, the prices of those items which are not decided by the government came down during the week. The index of ‘fuel, power, light and lubricants´ fell by 3.7%, as prices of petrol, jet fuel (Aviation Turbine Fuel), naphtha and furnace oil declined by 10%, 7%, 23% and 15% respectively.
In addition to fuel items, the prices of fruits and vegetables, various pulses steel, pig iron and certain metals too declined during the week.
The central bank has taken a host of measures releasing as much as Rs3,00,000 crore to fuel growth and with the inflation coming down further, it might take more steps to boost industrial output.
Apart from fruits and vegetables, prices of imported edible oil, rice bran oil and coconut oil also declined.
The index for chemicals and chemical products group declined by 0.6% and transport equipment and parts declined by 0.5% during the week.
However, the prices of non-food articles group rose by 0.1% due to higher prices of fodder, groundnut seed, gingelly seed and raw cotton.
In the manufactured products category, atta (by 2%), groundnut oil and ghee (by 1%) and cotton seed oil became dearer during the week.
The inflation data of the week does not capture the impact of 4% excise cut across the board announced last week on 7 December as a part of the stimulus package to revive the slowing Indian economy.
The inflation for the week ended 11 October stood at 11.30%, up from the provisional estimates of 11.07%.