New Delhi: Inflation fell for the sixth consecutive week, to 2.43%, the lowest in over six years, as prices of food items like pulses, dairy products and edible oil softened further in the last week of February.
Even the prices of manufactured items, including iron and steel, textiles, chemicals and batteries, declined during the week ended 28 February.
Wholesale prices-based inflation is now at a level seen in June 2002, by falling 0.6 percentage points from 3.03% a week ago. It was 6.21% during the corresponding week a year ago.
Terming the decline below 3% on expected lines, economists expect inflation to reach zero in the next couple of months.
“This is on expected lines. It was during last February and March that inflation spiked. The prices of commodities, primarily oil and foodgrains, have moderated,” said chief statistician of India Pronab Sen.
According to Icrier director Rajiv Kumar, “It is no surprise. In fact, we should now begin to start worrying about deflation. We could see zero inflation in 2-3 months.”
During the week, the prices of maize, arhar and moong declined by 1% each. Dairy products fell by about 2% while edible oil also fell by about 1%.
Among manufactured products, prices of textile items
like nylon filament yarn declined by 2% while sacking bags fell by 1%. At the same time, steel ingots were cheaper by as much as 13% and batteries prices softened by 3%.
The fuel index remained unchanged at its previous week’s level of 323.5.
During the week, prices of fruit and vegetables and bajra were expensive by 2% each while bakery products and masur prices firmed up by 1% each.
Elsewhere, cement and some inorganic chemicals prices also firmed up.
The declining inflation has also raised hopes of further cuts in the benchmark rates by the Reserve Bank to spur the economy as industrial production declined for the second month in a row to 0.5% in January 2009.
Crisil principal economist DK Joshi said, “I believe there could be a cut of 50 basis points in both the repo and reverse repo rates next month.”
Last week, the RBI slashed the short-term lending and borrowing rates -- the repo and reverse repo -- by 50 basis points to arrest economic slowdown with India’s GDP growth falling to over a five-year low of 5.3% in Q3.
Inflation for the week ended 3 January 2009, was revised upward to 5.33% from 5.24% in the provisional estimates.