The Telegraph
Saturday , March 15 , 2014
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Inflation below 5%

New Delhi, March 14: Inflation fell below 5 per cent for the first time in nine months in February on the back of a moderation in the prices of onion and potato.

The wholesale price index (WPI) came down to 4.68 per cent in February from 7.28 per cent a year ago. It was 5.05 per cent in January 2014.

This has created headroom for the RBI to cut interest rates in the monetary policy review on April 1 to boost sagging economic growth.

“Need to watch inflation carefully. Happy that overall inflation is coming down,” finance minister P. Chidambaram said.

Planning Commission deputy chairman Montek Singh Ahluwalia said, “This is clearly a good news. It shows that this area (price situation) is now getting into a more comfortable range.”

Food inflation, which has been a major irritant for the government, dropped to 8.12 per cent in February from 8.8 per cent in January as the rate of price rise slowed in almost all items, except fruits, rice and milk.

Prior to February, the lowest WPI was recorded in May 2013 at 4.58 per cent.

The annual rate of price rise for onions contracted 20.06 per cent in February. The rate of price rise in potato slowed to 8.36 per cent. Overall inflation for vegetables dropped to 3.99 per cent from 16.6 per cent in January. There was also a drop in the prices of pulses, cereals and wheat.

However, fruits, milk and other protein-rich items such as egg, fish and meat became costlier in February. Inflation in manufactured items such as sugar and edible items was 2.76, same as in January.

Meanwhile, December inflation has been revised upwards to 6.4 per cent from 6.16 per cent estimated earlier.