Statement of Finance Ministry on inflation

Statement of Finance Ministry on inflation

Annual (year-on-year) rate of inflation remained stable for the third consecutive week at 0.3 per cent in the week ended March 28, 2009, though lower by 5 basis points relative to the week ended March 21. The corresponding inflation rate in 2007-08 was 7.8 per cent.

Year-on-year Inflation by Commodity groups

The change in inflation rates in the current week by commodity groups is thus:

i. In ‘primary articles’, inflation declined to 3.5 per cent in the week under reference, from 3.9 per cent in the previous week. In ‘food articles’, inflation was stable at 6.3 per cent. In ‘non-food articles’, inflation eased to (-) 0.1 per cent compared to (-) 1.1 per cent last week. In ‘minerals’, the steep decline in inflation to (-) 13 per cent in the current week followed a steady run of a rate of (-) 1.2 per cent for five consecutive weeks commencing from February 14, 2009.

ii. In ‘fuel and power’, inflation continued steady at (-) 6.1 per cent in the current week.

iii. In ‘manufactured products’, inflation rate increased to 1.4 per cent in the current week, from 1.3 per cent last week, following a deepening of inflation in textiles, chemicals & chemical products, machinery & machine tools and transport equipment & parts. There is also evidence of an easing of negative inflation in edible oils in the food sub-group.

Inflation in the combined food index (wt = 25.43 per cent) for the week ended March 28, 2009 decreased to 5.8 per cent compared to 6.0 per cent last week.

Average annual inflation is assessed at 8.4 per cent (provisionally) in 2008-09 versus 4.7 per cent in 2007-08, while the average monthly inflation in March 2009 is like-wise provisionally at merely 0.7 per cent as against 7.5 per cent in March 2008.

Deseasonalised monthly WPI annualized inflation

Deseasonalised overall inflation has persistently remained negative for 7 consecutive months, with the negative trend setting in since September 2008 at (-) 3.2 per cent. This rate intensified to (-) 19.7 per cent in November, but eased thereafter to (-) 2.3 per cent in January 2009. In February and March 2009, deseasonalised inflation rate, as per provisional data, was (-) 3 to (-) 4 per cent.