Inflation rises a tad to 10.72%

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New Delhi, Nov 6 : After declining for five consecutive weeks, inflation marginally rose to 10.72% for the week ended October 25 on Friday due to rising prices of essential commodities like vegetables, pulses and cereals, and some manufactured items.

Inflation of 30 essential commodities rose to 7.51% from 7.47%, a finance ministry statement said, adding that prices of six out of 30 items increased during the week. However, analysts say that the inflation is on a downward trajectory and is expected to fall in the coming weeks.

“This is not likely to be any sustained increase. We are pretty much on track as far as inflation is concerned. Probably by mid-December or even earlier, we may see inflation coming down to single digits,” said Axis Bank economist Saugata Bhattacharya.

Analysts say the Reserve Bank of India’s monetary policy stance is unlikely to be changed by the one week figure and continuity is easing of interest rates is expected to be maintained.

Global commodity prices are declining, which means the domestic inflation will decline further, says LP Aggarwal, GM (credit), Punjab National Bank.

In its mid-term review of the credit policy released last month, the RBI said inflation is expected to reach 7% by the end of this fiscal. The liquidity infusion measures taken by the RBI would not cause inflation to go up as demand across the world is lowering, says Rajiv Kumar, director, Icrier.

The Reserve Bank in the last one month has infused liquidity to the tune of Rs 2,70,000 crore by cutting the cash reserve ratio by 350 basis points and statutory liquidity ratio by 100 basis points.

Besides it has also cut its short term lending rate by 150 basis points.

Among the primary articles, prices of rice increased by 3% and tea by 2% while vegetable prices were up almost 1%. Raw rubber was costlier by 7%, and raw cotton by 3%. In the manufactured items category, prices of butter, woollen clothes and electric motor were up 1%. Despite the fall in the prices of steel, the prices of automobiles including auto-rickshaws increased by 6% and motorcycle by 1%.

Inflation for the week ended August 30 was revised to 12.38% from the provisional estimate of 12.10%. Inflation had peaked at 12.91% for the week ended August 2.