Inflation at 15-month low of 3.36 per cent

Inflation declined to about a 15-month low of 3.36 per cent mainly due to fall in the prices food articles like fruit and vegetables, pulses, and some manufactured items, raising hopes of cuts in the key policy rates by the RBI. Wholesale price based inflation declined by 0.56 percentage points during the week ended February 14 against 3.92 per cent in the previous week. On Wednesday, the government expressed confidence that the RBI may ease money supply further. Replying to the debate on the interim Budget in the Rajya Sabha, Finance Minister Pranab Mukherjee said, "I am fully concerned that increased public spending may put pressure on the government's borrowing programme and overall credit offtake in the economy." Mukherjee said: "There is, however, scope for appropriate compensatory monetary policy options, (which) I am sure will be exercised by the RBI at the right time." During the week, prices of food articles like maize fell by five per cent, barley by three per cent, and fruit and vegetables by two per cent while eggs and spices declined by one per cent each. Among manufactured products, prices of mustard oil eased by two per cent, and sooji and coconut oil by one per cent each. At the same time aluminum ingots got cheaper by 6 per cent, and liquid chlorine by three per cent.

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