JOIN USThe overall intensity of the Wholesale Price Index (WPI) based inflation, which has been showing decline consistently in the past few months, got diluted mainly because of lowering of pressure on some key food items and vegetables.
Inflation, the rising spree of which in the first half of the current fiscal caused concern to the government, stood at 8.58 per cent in October.
Inflation remained in double digit for six months from January this year to July because of spiraling rise in food inflation. It started declining to single digit in August and this trend has been continuing for the last three months consecutively.
Analysis of inflation data shows prices of certain food items declined on an year-on-year basis. Wheat became cheaper by 1.49 per cent while prices of pulses declined by 8.37 per cent. Similarly, overall vegetable prices dropped by 4.59 per cent. Even as inflation continues to remain above comfort level of 5 per cent as prescribed by the Reserve Bank, the ongoing phenomenon of decline in overall inflation rate would give the much needed elbow room to the apex bank to adopt liberal monetary policy.
Adoption of liberal monetary policy will help in bringing down the overall lending rate thereby making all sorts of borrowing ranging from commercial loan to housing, car and personal loan less expensive. So far the Reserve Bank has been adopting tight monetary policy to rein in inflationary expectation.
Planning Commission Deputy Chairman Montek Singh Ahluwalia said “inflation is comfortable. I think it does vindicate the government’s proposition that we are not facing an accelerating inflation or inflation that is out control.”