The Hindu 14.08.2009

Inflation dips further

Special Correspondent

NEW DELHI: The rate of inflation dipped further to minus 1.74 per cent for the week ended August 1 from (-)1.58 per cent in the previous week despite soaring prices of essential commodities such as cereals, pulses, sugar, fruits and vegetables.

According to the official wholesale price index (WPI) data released here on Thursday, the annual point-to-point inflation has strayed deeper into negative territory mainly because during the like week a year ago, the price spiral was pegged at a 16-year high at 12.91 per cent.

Even as the government is drawing up contingency plans to tackle the adverse impact of the deficient monsoon rainfall on kharif production and foodgrain prices, the WPI inflation is expected to remain in the negative zone for another two months on account of the high base effect.

And this is despite the fact that on an annual basis, the prices of cereals have soared by 12 per cent, pulses by 18 per cent and fruits and vegetables by 18.4 per cent.

During the week, prices of coarse cereals such as barley and jowar went up by two per cent each, while arhar, spices, and fruit and vegetables turned dearer by one per cent each. Imported edible oils were five per cent costlier while unrefined oils and sugar were up three per cent and one per cent, respectively over the previous week.

Manmohan’s call

Taking stock of the impact on kharif production owing to the deficient rainfall last week and its fall-out on prices of essential food items, Prime Minister Manmohan Singh had said: “Agricultural operations have been adversely affected in several parts of the country, causing distress to farmers. A deficit of more than six million hectares has been reported in paddy, which is the worst-affected crop…In order to contain increase in prices of essential commodities, the Central government and the State governments will have to work together and activate the public distribution system which is an important safety net especially for the poor.”