New Delhi, Nov. 21: The rate of inflation fell to 4.88 per cent in the week ended November 8 from 5.01 per cent in the previous week driven by lower prices of edible oils and oilseeds, the government said in a statement.
The wholesale price index (WPI) for commodities remained stable at the previous week’s level of 176.1 while inflation during the year-ago period stood at a lower 3.45 per cent.
The index for food products, which also includes edible oils, fell 1.6 per cent to 164.4 from 167.1 in the week ended November 1 but energy and manufactured product prices, the two major components of the index, remained unchanged.
While index for non-food articles, which comprises major oilseeds, raw cotton and jute, declined by 0.3 per cent to 182.5 from 183.1 for the previous week.
The downward trend in inflation is in line with Reserve Bank of India’s (RBI) and the government estimate. In its mid-term review of monetary policy, RBI lowered its forecast for inflation to 4.0-4.5 per cent, with a possible downward bias, from an earlier projection of 5.0-5.5 per cent.
“This downward trend will continue due to a bumper crop harvest and a tight hold on money supply,” said P.K. Chowdhury, managing director of rating agency Icra.
A bumper crop harvest is expected this year after the best monsoon in a decade which analysts say would further drive down food prices by December when the new crop hits the market.
The monsoon is vital to the economy as agriculture contributes around 25 per cent to GDP and provides income to about 70 per cent of the country’s billion plus population.
Better-than-expected farm output has also prompted the government and the RBI to raise the GDP forecast to over 7.0 per cent this year.