Inflation drops to 8.51% in August

New index series released

The overall inflation in August witnessed a fall of 1.27 percentage points from 9.78 per cent in the month of July as per the new series, which consider 2004-05 as the base year.

As per the old series with base year of 1993-94, WPI-based inflation stood at 9.5 per cent for August as against 10 per cent in July. With inflation still remaining at “high level” vis-à-vis “comfortable level” of five to six per cent as pegged by the Reserve Bank, Finance Minister Pranab Mukherjee stressed the need to remain vigilant despite downward trend in inflation under the new series of WPI.

“Even though the good news of lower inflation is reported today, yet there shall be no room for complacency,” a cautious Mukherjee said.  “We must continue to be vigilant and be prepared with the instruments of fiscal and monetary policy to use them as and when the need arises.”

“Inflationary pressure is still there because food prices have gone up because of the erratic monsoon and certain other things... The RBI is constantly watching the situation. We are in touch with the RBI,” he said. The RBI will come out with mid-quarter review of monetary policy on September 16. Further tightening of monetary policy will harden the overall interest rate thereby making all sorts of borrowing including car, housing and personal loans more expensive.

As per the new WPI data prices of primary articles — food, non-food articles and minerals – went up by 15.76 per cent on an annual basis. Year-on-year, food articles became costlier by 14.64 per cent, while prices of non-food articles likes fibres and oilseeds zoomed by 16.04 per cent.

Fuel and power registered an annual inflation of 12.55 per cent.  Manufactured products — foods products, beverages, tobacco, cotton textiles, wood and paper—witnessed an average price rise of 4.78 per cent on an annual basis.

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