NEW DELHI, JULY 18: For the first time in 17 years, annual rate of inflation fell below the two per cent mark to 1.83 per cent for the week ended July 3, mainly on account of steady vegetable prices compared to the previous year.The record low in inflation, based on wholesale price index (WPI), is due to lower rates for vegetable compared to unprecedented price rise this time last year. The index for vegetables during the current week is way lower at 430.6 as against 699.1 in the corresponding week of last year. In other words, if the prices of vegetables were Rs 699.10 last year, it is only Rs 430.60 now.The falling trend was also helped by a slackness in industrial demand, which kept the prices of manufactured products low. During the current week, the rate of increase in prices declined by 0.20 percentage points to 1.83 per cent (provisional) from 2.03 per cent (P) the week before. In comparison, the inflation rate was at 8.15 per cent in the corresponding week of last year. This is the lowest inflationrate since August 1982 when it touched 1.66 per cent.In the current fiscal, prices of agricultural produce remained steady due to a bumper crop. Foodgrain production in 1998-99 is estimated to have touched a record 205 million tonnes.During the current week, the index for all commodities (base: 1981-82=100) declined by 0.1 per cent to 356.9 (provisional) compared to 357.1 (P) in the previous week. The final index for the week ended May 8 stood at 356.3 as against 356.2 on the provisional index. The inflation rate for the week was 3.7 per cent compared to 3.67 per cent estimated earlier.With a normal monsoon forecast for the current year, agricultural prices are expected to remain stable in the coming months. However, with signs of the economy coming out of the industrial slowdown, there could be a rise in prices of manufactured products.Despite the record lows in inflation based on wholesale prices, the retail prices measured by consumer price index for urban non-manual employees (CPI-UNME) arestill ruling high at 6.1 per cent in June compared to monthly average of 2.78 per cent on WPI.Among the three major groups in WPI, the rate of rise in prices has been the lowest in primary articles at 1.38 per cent, followed by manufactured products at 1.73 per cent and fuel, power, light & lubricants at 3.76 per cent.In the reference week, indices for primary articles and manufactured products declined compared to the previous week, while index for fuel, power, light & lubricants remained unchanged at the previous week's level. The index for primary articles declined by 0.1 per cent to 381.5 from 381.9 the week before on account of fall in the index for non-food articles.The index for food articles increased marginally during the week to 447.3 from 447.2 due to higher prices of wheat, barley, vegetables and condiments & spices (1 per cent each).From the sub-group, prices of bajra, ragi, gram and fruits (1 per cent each) eased during the week. Non-food articles' index declined by 0.4 per cent from372.5to 371.0.
