Inflation up at minus 1.21%

Inflation up at minus 1.21%
The Financial Express, July 17, 2009, Page 2

Press Trust of India, New Delhi

Driven by higher prices of fuel items like petrol and diesel, inflation rose marginally to (-)1.21% for the week ended July 4 against (-)1.55 %in the previous week.

At the same time, prices of food articles like cereals, pulses, spices, and fruit and vegetables also remained firm. The wholesale price index during the corresponding week a year ago was as high as 12.19 %.

Following the government's decision to raise fuel prices effective July 1, prices of naphtha rose 15%, furnace oil 11%, petrol 10%, high-speed diesel 7% and light diesel oil by 4 %.

Fuel items turned expensive as the government increased prices of petrol and diesel by Rs 4 and Rs 2 per litre, respectively. As a result, the Fuel, Power, Light and Lubricants index increased by 3.1% during the week.

This is the fifth week in a row when inflation remained in negative territory. However, according to analysts, the RBI may not cut benchmark policy rates or reduce the ratios when the central bank reviews the credit policy on July 28.

The RBI should not cut the repo rate and the cash reserve ratio in July monetary policy, said former RBI deputy governor S S Tarapore. The challenge before the monetary authorities at present is to deal with the fiscal deficit, he said.

During the week, food items like coffee turned expensive 15%, arhar 3% , maize 2%, and condiments and spices by 1%.