Inflation eases in January, remains a concern, says Mukherjee

Monday, February 14, 2011

NEW DELHI - India’s annual inflation based on wholesale prices eased marginally to 8.23 percent in January, staying well above the comfort zone, but the government hoped it will come down to 7 percent by the end of current fiscal.

“While the WPI inflation in January, at 8.23 percent, is lower than the previous month’s inflation of 8.43 percent, the decrease is too small to be comfortable,” Finance Minister Pranab Mukherjee said Monday.

Reacting to the monthly data of the wholesale price index (WPI), Mukherjee said despite some moderation, inflation continued to remain challenging and much above the comfort zone.

However, the finance minister expressed hope that inflation would come down to 7 percent by the end of current financial year.

“I am hoping it will be around 7 percent by March,” Mukherjee told reporters here.

Prices of manufactured products, which have nearly 65 percent weight in the wholesale price index, rose 3.75 percent during January.

The headline inflation continued to remain high on sharp increase in the prices of food items. Food articles, which have 14.33 percent weight in the index, became costlier by 15.65 percent year-on-year, according to data released by the ministry of commerce and industry.

Wholesale price inflation for November has been revised upward to 8.08 percent from 7.48 percent reported earlier.

Prices of food items moderated during the last week of January. Annual food inflation dropped by nearly four percentage points to 13.07 percent for the week ended Jan 29 from 17.05 percent in the previous week, the data said.

However, inflation continues to remain much above the comfort level of 4-5 percent despite a series of anti-inflationary measures taken by fiscal and monetary policy makers.

The RBI in its third quarter monetary policy review recently hiked its repurchase or repo rate to 6.5 percent from 6.25 percent and reverse repo rate to 5.5 percent from 5.25 percent.

It also revised its current fiscal year-end projections for inflation, raising it to 7 percent from the earlier 5.5 percent.

The average inflation so far this financial year is 7.44 percent. Inflation based on wholesale prices was 9.42 percent in January last year.

Filed under: Economy

will not be displayed