New Delhi: Lower prices of fruits, vegetables and textile products cooled down inflation to 3.45% for the week ended 15 December, against 3.65% in the previous week.
But high oil and food prices in the international market are still a cause for concern.
The wholesale price based index stood at 5.73% in the corresponding week last year.
During the week ended 15 December, prices of fruits and vegetables declined by 2%, while those of textile items fell by 5.9% and cotton yarn by 7.7%, according to official figures issued on Friday.
However, prices of poultry chicken went up by 2% and those of urad, condiments and spices by 1% each.
The prices of beverages, tobacco, and tobacco products rose by 3.3% as cigarettes (8%) and potable country liquor (6%) became dearer.
On the chances of cut in interest rates, HDFC Bank’s Chief Economist Abheek Barua said, “Consumers are unlikely to get any relief in near future as there is little chance of interest rates coming down due to high inflationary expectations.”
Going forward oil and food prices remain major concerns. If there is a revision in oil prices, it can push inflation beyond 4%, he said.
During the week, sugar prices also showed a marginal upward movement. While, the prices of malted food rose by 3% and imported edible oil and groundnut oil also moved up by 1%.
Analysts say the government would not find it easy to keep inflation at below four per cent due to rising oil and food prices in the international market.
Oil prices are likely to remain high in the coming days due to turbulence in the middle east, and food prices would firm up due to drought in Australia and the US government’s decision to divert large scale area to maize cultivation for ethanol.
“In the next three months, inflation is likely to go up and we expect it to be around 5 per cent for the current fiscal,” Crisil Principal Economist D K Joshi said.
He said government may pass hike in fuel prices to consumers any time.
Prices of manufactured products, which have a weight of 63.75% in the price index, marginally declined by 0.2%.
Fuel, power, light and lubricants index, which has a weight of 14.23% in the wholesale price index, remained unchanged at its previous week’s level.
No movement was noticed in prices of leather and plastic products apart from tyres and tubes, pesticides, and medicines during the week ended on 15 December.
Rice bran prices were seen declining by 3% during the week.
However, the prices of automobile spare parts and bicycles went up by 2% and 1% respectively, partly due to rise in prices of iron steel by 1%.
The consumer prices index (CPI), which measures monthly movement in prices of goods and services rose by 5.5% during October.