This jump in the inflation was despite the slump in the prices of fruits, groundnut, linseed and tobacco. This was the lowest inflation rate recorded since August 15, 1982, when it stood at 1.66 per cent. It was also the first time in 17 years that it had declined below the two per cent mark. However, it was just above the eight per cent mark at 8.08 per cent during the corresponding week last year (July 11, 1998).

In a matter of seven months, the inflation rate had plummeted by 3.30 per cent. It had been witnessing a downward trend for the last six weeks since May 29. Its latest increase was on account of hike in prices of vegetables, masur, fish, tanning materials, castor seed, lac, cattle feed and castor oil. It had nevercrossed the double digit barrier for continuous 223 weeks, pushing the old record of 1993 by the wayside.

According to the sources, the bumper crop of wheat, oil seeds and pulses was one of main reasons for the inflation rate to recede considerably. Many financial experts had expected that the Kargil conflict would help in boosting the inflation rate to some extent. But to the contrary, the inflation rate had shown a decline for the last couple of months.

The government policies which brought in some stringent measures was also attributed to the fall in the inflation rate in recent months. The inflation rate based on consumer price index for industrial workers which is real picture of retail prices nosedived by 0.65 per cent to 7.71 per cent in May from 8.36 per cent in the previous month. It had been in single digits for the eight successive months since January this year. After staying in double digits for consecutive eight months, since May 1998, it had fallen to single digit in January 1999. Aftershowing a decline for two consecutive weeks, the official wholesale price index for all commodities (Base 1981-82) rose marginally to 357 on July ten from 356.9. This rise in the index was due to the increase in the indices of non-metallic mineral products and chemicals and chemical products.

The final wholesale price index for all commodities (Base 1981-82) stood at 356.3 on May 15 as against the provisional index of 357.1. The inflation rate based on final index works out to 3.61 per cent in contrast to 3.84 per cent based on provisional data.

With vegetables prices going up by six per cent, masur prices up by five per cent, fish prices up by three per cent, maize, gram and milk prices up by two per cent each, wheat, moong, condiment and spices prices up by one per cent each, the index for food articles, under primary articles group, rose marginally to 447.5 from 447.3. But fruits prices fell sharply by seven per cent, barley prices down by two per cent, jowar, bajra, arhar and mutton prices moved downby one per cent each.

The index for non-food articles slumped by 0.2 per cent to 370.4 from 371 because groundnut, linseed and tobacco prices dropped by one per cent each. But tanning materials prices soared by 13 per cent, castor seed prices went up by nine per cent, lac prices moved up by three per cent, fodder prices rose by two per cent and copra prices moved up by one per cent.