Inflation dips to a historic low of 0.27 pct

Inflation moved towards zero by declining to 0.27 per cent for the second week of March.

Written by Agencies | New Delhi | Published: March 26, 2009 2:03 pm

Inflation moved towards zero by declining to 0.27 per cent for the second week of March,even as essential food prices continued to remain high due to high MSP and inadequate production of pulses and coarse cereals.

The 0.17 percentage point decline in wholesale prices inflation from 0.44 per cent during the week ended March 7 was also attributed partly to a high base effect as the rate of price rise was 8.02 per cent in the same period a year ago.

“This is not because of lack of effective demand. It is basically due to the base effect and that is not something which we are unaware of,not something which we are not factoring (in),” Economic Affairs Secretary Ashok Chawla said.

The persistent decline in inflation has fuelled hopes that the RBI would further ease money supply to boost economic growth,which is slackening.

“As for RBI cutting rates,in a month we can see some 50 basis point cut in key rates. Right now there has been enough liquidity and RBI has been proactive in taking measures,” Crisil Principal Economist D K Joshi said.

Food prices in the primary articles group (which are not processed) rose 0.1 per cent on a weekly basis and a whopping 7.10 per cent on a yearly basis. In the manufactured category (processed variety),food prices increased 1.2 per cent on a weekly basis and 6.63 per cent year-on-year.

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