Statement of Finance Ministry on Inflation

Statement of Finance Ministry on Inflation Annual (year-on-year) rate of inflation declined to 0.4 per cent for the week ended March 7, 2009 from 2.4 per cent in the week ended February 28, 2009. The drop of 199 basis points in inflation is the steepest since the week ended November 1, 2008. In the last 30 years, there is no record of inflation falling this low since 1977-78. Year-on-year Inflation by Commodity groups Commodity group-wise, the fall in overall inflation in the current week is as below: i. In ‘primary articles’, inflation decreased to 4.4 per cent in the week under reference, against 5.8 per cent in the earlier week. In ‘food articles’, inflation fell to 7.4 per cent after having been stable at 8.3 per cent in the previous two weeks. In ‘non-food articles’, inflation decelerated to (-) 1.7 per cent compared to 1.3 per cent last week. In ‘minerals’, the rate of decline continued steady at (-) 1.2 per cent since the week ended February 14, 2009. ii. In ‘fuel and power’, inflation clocked (-) 6 per cent versus (-) 5.1 per cent in the earlier week. iii. In ‘manufactured products’, inflation rate decreased to 1.3 per cent in the current week, from 4.0 per cent last week. Inflation in most sub-groups declined or remained steady relative to rates recorded in the previous week. The notable exceptions have been in dairy products & oil cakes under food products, jute, hemp & mesta textiles under the textiles sub-group and electrical appliances & apparatus under machinery and machine tools. The basic metals, alloys and metal products sub-group recorded a steep deceleration in inflation to (-) 11 per cent from 1 per cent in the previous week, arising from intensified declines in iron & steel and non-ferrous metals. Year-on-year inflation in the combined food index Inflation in the food index (wt = 25.43 per cent) for the week ended March 7, 2009 declined to 6.0 per cent compared to 7.5 per cent last week. Contribution to inflation by Commodity groups Contribution of commodity groups to the year-on-year headline inflation for the week ended March 7, 2009 compared to the previous week is as below: • Primary articles contributed 227 per cent to inflation, a quadrupling from its share of 56 per cent in the previous week. • Fuel and power depicted negative contribution at (-) 289 per cent relative to (-) 46 per cent in the earlier week, registering a six-fold drop. • In manufactured products, the contribution to inflation was 166 per cent in the week under reference, from 90 per cent in the previous week.

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