The Telegraph
Saturday , December 15 , 2012
Since 1st March, 1999
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Inflation less of an irritant

New Delhi, Dec. 14: Inflation dropped to a 10-month low of 7.24 per cent in November, prompting finance minister P. Chidambaram to say it could decline further in the coming months.

The decline in inflation during November from 7.45 per cent a month ago and 9.46 per cent in the corresponding month a year ago can be attributed to falling prices of certain vegetables.

Encouraged by the trend, Chidambaram said it would moderate further in the next two to three months.

“Inflation is a challenge. Inflation worries the government. While the rate based on the consumer price index is sticky, good news is that the rate based on the wholesale price index (WPI) seems to be trending downwards ... If it trends downwards, there will be some reason for comfort,” he said during a discussion in Parliament.

Vegetable prices decreased 1.19 per cent in November this year compared with a surge of 10.68 per cent in the same month a year ago.

However, prices of some food items such as potato, wheat, cereals, rice, pulses, edible oil and sugar went up during the period.

“It is a welcome trend if the inflation rate has come down... We should work towards a more comfortable level of inflation, which is 5-6 per cent,” Prime Minister’s Economic Advisory Council chairman C. Rangarajan said.

Planning Commission deputy chairman Montek Singh Ahluwalia termed moderation in inflation as a “very good signal”.

“The time has come to recognise that inflation is clearly softening and growth is weak,” Ahluwalia said.

Meanwhile, retail inflation in November moved up to 9.90 per cent, mainly on account of higher prices of sugar, vegetables, edible oil and clothing.

Food inflation, as a category in the WPI, rose to 8.5 per cent during the month from 8.32 per cent a year ago. Food articles have 14.3 per cent share in the WPI basket.

Though vegetables in general registered a decline, potato and onion prices shot up 72.20 per cent and 17 per cent, respectively, year on year in November.