India’s headline inflation fell to 7.47 per cent for December 2011, lowest in two years, as compared to 9.11 per cent for the previous month and 9.45 per cent during the corresponding month of the previous year.
India’s headline inflation fell to 7.47 per cent for December 2011, lowest in two years, as compared to 9.11 per cent for the previous month and 9.45 per cent during the corresponding month of the previous year.
Headline inflation, which also factors in manufactured items, fuel and non-food primary items, has been above the 9 per cent-mark since December, 2010.
The primary articles index declined by 1.6 per cent to 197.9 from 201.1 for the previous month.
The index for manufactured products rose by 0.6 per cent to 140.6 from 139.8 for the previous month.
"December inflation numbers indicate improvement in the macro-economic parameters," said Finance Minister Pranab Mukherjee. He feels that inflation is likely to moderate to 6-7 per cent by March end.
C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, told NDTV Profit that a fall in headline inflation is a welcome sign. "Headline inflation is likely to slip below 7 per cent by March 2012. We expect non-food manufacturing inflation to come down in the future as well," he said.
He further said that high levels of manufacturing inflation are still disturbing. "The rupee's fall and commodity prices have been key reasons behind this," he explained.
He suggested that the liquidity problems should be met through open market operations (OMOs) rather than reducing the cash reserve ratio (CRR).
The index for 'Food Articles' group declined by 3.1 per cent to 190.8 from 196.9 for the previous month due to lower prices of fruits and vegetables (13 per cent), condiments and spices (6 per cent), urad (5 per cent), poultry chicken (3 per cent), tea (2 per cent) and jowar, rice, arhar, ragi and barley (1 per cent each).
However, the prices of pork (8 per cent), fish-marine (5 per cent), maize (3 per cent), bajra, egg, beef and buffalo meat, mutton and masur (2 per cent each) and gram, coffee, wheat and milk (1 per cent each) moved up.
The index for non-food articles jumped 1.3 per cent to 178.6 from 176.3 for the previous month due to higher prices of gaur seed (20 per cent), flowers (14 per cent), linseed (8 per cent), soyabean (6 per cent), mustard seed (5 per cent), raw silk (4 per cent), sunflower and raw rubber (3 per cent each), safflower, groundnut seed and niger seed (2 per cent each) and gingelly seed and fodder (1 per cent each). However, the prices of cotton seed (6 per cent), castor seed (4 per cent), coir fibre, raw cotton and raw jute (3 per cent each) and copra (1 per cent) declined.
The fuel and power index rose by 0.6 per cent to 172.6 from 171.6 (Provisional) for the previous month due to higher prices of naphtha (5 per cent), aviation turbine fuel, light diesel oil and bitumen (4 per cent each) and furnace oil (3 per cent). However, the prices of petrol (3 per cent) declined.
The sharp moderation in the food inflation contributed to the overall easing of prices. Prices of food contribute about 14 per cent to the overall wholesale price index basket. Food prices fell for the second consecutive week as food inflation remained in the negative zone at -2.90 per cent for the week ended December 31, 2011.
The RBI, which is scheduled to come out with its third quarterly monetary policy review on 24 January, has already hiked interest rates 13 times since March, 2010, to tame inflation.
Analysts expect the central bank to abstain from its hawkish monetary tightening measures as the WPI inflation has primarily been on a declining trend.
An analyst survey ahead of the data release, suggested that the inflation would fall to around 7.4 per cent.
WHOLESALE INFLATION in 2011
December 7.47 per cent
November 9.11 per cent
October 9.73 per cent
September 10 per cent
August 9.78 per cent
July 9.36 per cent
June 9.51 per cent
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