India's Inflation plummets to 6.8% on low oil prices

The Annual rate of inflation, year-on-year as conventionally measured, declined to 6.8 per cent for the week ending December 6, 2008 compared to a rate of 8.0 per cent reported in the previous week. Inflation continues to be in single digit with a sharp decline of 116 basis points over last week.

The Contribution of commodity groups to year-on-year inflation rate for the week ending December 6, 2008 shows that primary articles covering food, non-food and minerals accounted for 39.14 per cent of inflation, which is 17 percentage points more than their contribution to the WPI basket. The fuel and power group with a share of 14 per cent in the WPI basket accounted only for 1.83 per cent of inflation.

In the major commodity groups, the annual year-on-year inflation in the fuel and power group declined to 0.58 per cent in the current week compared to 4.48 per cent reported in the previous week, while in the case of 'manufactured products', the inflation rate in the current week decreased to 7.32 per cent, as compared to 7.86 per cent in previous week. However, in the 'primary articles' group, the rate of inflation increased to 11.81 per cent, as compared to 11.66 per cent reported last week.

Items showing decline in the week-on-week inflation rate in primary articles are cauliflower, cabbage, black pepper, cardamoms, most pulses, tea and wheat. Items which have registered increase in the inflation rates are bajra, rice, onions, banana, sapota, turmeric, gingelly and groundnut oilseeds and raw cotton. In the fuel and power group, all mineral oil products show a decline in the weekly inflation rate. Among the manufactured products, sugar, gur, atta, maida, salt, gingelly oil, groundnut oil and ghee showed an increase in inflation rate. Steel products such as CR coils, sheets, pig iron, (basic and foundry), coconut oil, zinc ingots and sooji are some items showing a decline in the inflation rate.

For the food total i.e. primary articles and food products, the year-on-year inflation was 8.51 per cent compared to 8.63 per cent last week and 1.02 per cent last year.

The monthly deseasonalised inflation rate, which had been negative during September-October, turned positive in November 2008 due to an increase in the rate of primary goods inflation. The overall monthly deseasonalised inflation in fuel and power group and in manufactured products remained negative in November 2008.

Source : Press Information Bureau

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