Inflationary pressure in the country continued to ease with inflation falling to a five year low at 3.07% for the week ended October 6. This is much lower than the 3.26% it clocked in the previous week and 5.36% in the corresponding week last year. This would also mean good news for consumers with the festival season on.
The figures are significant with RBI?s half-yearly review of the monetary policy just around the corner on October 30. Lower inflation rates has also led to some expectations of an interest rate cut by the apex bank in its review.
Inflation has been considerably lower than the RBI?s projection of 5% for this fiscal and even its target of 4% to 4.5% in the medium term.
However, the inflation rate may soon start rising again due to the high global oil prices. Global crude oil prices have touched a record high of $ 89 a barrel.
The current dip in inflation levels was fuelled mainly by cheaper fruit and vegetables, some manufactured items and high base effect. During the week under review, the prices of fruit and vegetable prices dipped by 4% while among manufactured items, prices of oil cakes and gur declined marginally by 1% each.
The fall in inflation may also be attributed to the recent appreciation of rupee, which touched nine-year high of 39.36 to a dollar, by lowering of prices of imported agricultural and manufactured products.
The government too has taken a number of measures along with RBI to rein in prices after inflation touched a record high of 6% early this year. The measures included a hike in interest rates and cut in customs duties on various food articles.