INFLATION for the week ended May 30 dropped to 0.13%, lowest since the government started recording such data in 1977-78, fuelling speculation that the figure could enter negative territory next week. This should address the fears of an immediate spike in overall inflation, but the sharp weekon-week increase in prices of food articles is worrisome.
The decline in headline inflation was largely due to a high base effect, or higher inflation numbers in corresponding the week last year.
Week on week, there was a 0.1% increase in the wholesale price index (WPI), led by a sharp 0.6% increase in the prices of food articles, data released by the commerce ministry on Thursday showed.
A rise in the rate of inflation over the last couple of months and a relaxed monetary policy led to fears that inflation could become a concern soon. "We think inflationary pressures are sequentially building up," a recent note by Goldman Sachs said.
Prime Minister Manmohan Singh has, however, countered the fears that pump priming of the economy by the recent stimulus packages and measures that will follow in the coming months would fuel inflation. "It (expenditure towards infrastructure) will not add to inflation, but to our economic growth," the prime minister said.
Some economists concurred with the prime minister and said inflation will fall into negative territory next week itself if there is no huge uptick in prices.
The decline in headline inflation was largely due to a high base effect, or higher inflation numbers in corresponding the week last year.
Week on week, there was a 0.1% increase in the wholesale price index (WPI), led by a sharp 0.6% increase in the prices of food articles, data released by the commerce ministry on Thursday showed.
A rise in the rate of inflation over the last couple of months and a relaxed monetary policy led to fears that inflation could become a concern soon. "We think inflationary pressures are sequentially building up," a recent note by Goldman Sachs said.
Prime Minister Manmohan Singh has, however, countered the fears that pump priming of the economy by the recent stimulus packages and measures that will follow in the coming months would fuel inflation. "It (expenditure towards infrastructure) will not add to inflation, but to our economic growth," the prime minister said.
Some economists concurred with the prime minister and said inflation will fall into negative territory next week itself if there is no huge uptick in prices.
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