Following is the text of the statement issued by the Finance Ministry on inflation here today.
“Annual rate of inflation, year-on-year, declined to 6.61 per cent for the week ending December 13, 2008 compared to a rate of 6.84 per cent reported in the previous week. Inflation continues to be in single digit for seven weeks consecutively, with a small decline of 23 basis points over last week.
Contribution of primary articles to the year-on-year inflation rate for the week ending December 13, 2008 show that this group accounted for 41.59 per cent, as against their share of 22.03 per cent to the WPI basket, while the fuel and power group has registered negative contribution. Prices of primary articles continue to rule high, despite the decline in overall inflation, due to the base effect.
However, the rate of inflation in essential commodities has declined from 9.01 per cent in the previous week to 8.78 per cent in the week ended December 13, 2008, while for the combined food index (weight = 25.43 per cent), the year-on-year inflation was higher at 8.71 per cent in the current week compared to 8.51 per cent last week and 0.94 per cent last year.
Commodity group-wise examination of year-on-year inflation shows that inflation in the ‘fuel and power’ group declined to (-) 0.18 per cent in the current week compared to 0.58 per cent reported in the previous week, while for manufactured products, the inflation rate in the current week decreased to 7.00 per cent, compared to 7.32 per cent in previous week. However, in the ‘primary articles’ group, the rate of inflation increased to 12.15 per cent, as compared to 11.81 per cent reported last week, accruing mainly from increase in iron ore prices.
Prominent among the items showing decline in the week-on-week inflation rate are seasonal vegetables, rice, maize, tea and arhar, while those which have registered increase are pulses, other cereals, onions, brinjal, cabbage and fish. Items in the fuel and power group remained stable. Among the manufactured products, sugar, certain edible oils, steel products and cement show decreased inflation rate, while gur, newspaper, PVC items and imported edible oils have increased.
Inflation rate as captured by the Consumer Price Indices for Agricultural Labour (CPI-AL) and Rural Labour (CPI-RL) declined by 3 basis points in November 2008 to 11.11 per cent compared to the previous month.
The current price pressure from minerals, particularly iron ore, has contributed substantially to the increase in the monthly deseasonalised inflation rate in the primary articles group.”