Market Commentary

India's inflation falls to 8%, might pave way for more rate cuts



Posted On : 2008-12-11 21:19:19( TIMEZONE : IST )

India's inflation falls to 8%, might pave way for more rate cuts

The Annual rate of inflation, year-on-year as conventionally measured, declined to 8.0 per cent for the week ending November 29, 2008 compared to a rate of 8.4 per cent reported in the previous week. For the fifth consecutive week, inflation continues to be in single digit with a decline of 40 basis points over last week.

An analysis of the contribution of commodity groups to year-on-year inflation rate for the week ending 29 November shows that primary articles covering food, non-food and minerals accounted for 33.2 per cent of inflation, which is 11 percentage points more than their contribution to the WPI basket.

In all the major commodity groups, the annual year-on-year inflation has declined compared to the previous week. In the 'primary articles' group, the rate of inflation decreased to 11.66 per cent, as compared to 11.98 per cent reported last week, while in the 'fuel and power', group, the inflation rate declined further to 4.48 per cent in the current week compared to 5.28 per cent reported in the previous week. In the case of 'manufactured products', the inflation rate in the current week decreased to 7.86 per cent, as compared to 8.15 per cent in previous week. The major articles that account for the decline in prices in the current week include vegetables, sugar, unrefined edible oil, raw rubber and lead ingots.

For the food total i.e. primary articles and food products, the year-on-year inflation was 8.63 per cent as against 8.81 per cent in the previous week and 1.51 per cent in the corresponding week of last year.

However, the monthly deseasonalised inflation rate, which had been negative during September-October, turned positive in November 2008. This was due to an increase in the rate of primary goods inflation in November 2008. The deseasonalised inflation for primary food showed marginal increase, while the decline in inflation rate of manufactured food continued. The overall monthly deseasonalised inflation in manufactured products remained negative in November 2008.

Source : Press Information Bureau

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