NEW DELHI: Cheaper food items pulled down headline inflation to a two-year low of 7.47 per cent in December, 2011, but this may not be enough for the Reserve Bank to slash key interest rates as rising prices of manufactured items remain a cause for concern.
Having remained perilously close to the double-digit mark throughout 2011, WPI inflation experienced a significant moderation only in December, declining from 9.11 per cent in the previous month. It was 9.45 per cent in December, 2010.
"Manufactured inflation and inflation in the power group of items have also declined, though only marginally, (and) therefore, continue to be a cause of concern,"Finance Minister Pranab Mukherjee said.
He, however, expressed optimism that headline inflation would moderate to 6-7 per cent by March-end, on account of the moderation in food prices.
The latest numbers are the lowest since December, 2009, when headline inflation stood at 7.15 per cent.
"The RBI, while framing its monetary policy, will have to take into account not only the decline in food inflation and headline inflation, but also factor in manufactured inflation," Prime Minister's Economic Advisory Council Chairman C Rangarajan said.
As per official data released today, food prices rose at a lower rate of 0.74 per in December, compared to 8.54 per cent expansion in the previous month. During the month, prices of vegetables, particularly onions and potatoes, fell sharply by between 30 per cent and 60 per cent on an annual basis.
However, inflationary pressure continued in manufactured items, which which have a weight of around 65 per cent in the WPI basket. Prices of manufactured products, went up by 7.41 per cent year-on-year in December, as against 7.70 per cent in the previous month.
(Source- http://economictimes.indiatimes.com)
Having remained perilously close to the double-digit mark throughout 2011, WPI inflation experienced a significant moderation only in December, declining from 9.11 per cent in the previous month. It was 9.45 per cent in December, 2010.
"Manufactured inflation and inflation in the power group of items have also declined, though only marginally, (and) therefore, continue to be a cause of concern,"Finance Minister Pranab Mukherjee said.
He, however, expressed optimism that headline inflation would moderate to 6-7 per cent by March-end, on account of the moderation in food prices.
The latest numbers are the lowest since December, 2009, when headline inflation stood at 7.15 per cent.
"The RBI, while framing its monetary policy, will have to take into account not only the decline in food inflation and headline inflation, but also factor in manufactured inflation," Prime Minister's Economic Advisory Council Chairman C Rangarajan said.
As per official data released today, food prices rose at a lower rate of 0.74 per in December, compared to 8.54 per cent expansion in the previous month. During the month, prices of vegetables, particularly onions and potatoes, fell sharply by between 30 per cent and 60 per cent on an annual basis.
However, inflationary pressure continued in manufactured items, which which have a weight of around 65 per cent in the WPI basket. Prices of manufactured products, went up by 7.41 per cent year-on-year in December, as against 7.70 per cent in the previous month.
(Source- http://economictimes.indiatimes.com)
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