Inflation down to 8.66% in April

Headline inflation in the country came down marginally to 8.66 per cent in April on the back of moderation in prices of certain food items , in line with the government's expectations.

However, prices of manufactured products and fuel and power continue to climb.

Overall inflation, as measured on the basis of the Wholesale Price Index (WPI), has been revised to 9.04 per cent for March from the original projection of 8.98 per cent. The revision was carried out as metal products were not incorporated earlier due to a programming error, the Department of Economic Affairs said.

In addition, the inflation figure for February has also been revised upward to 9.54 per cent from the provisional 8.31 per cent.

Chief Economic Advisor Kaushik Basu recently said headline inflation in April would come down to 8.5-8.6 per cent and the latest figures seem to affirm his prediction.

The numbers for April are also lower than the 9 per cent average inflation projected by the Reserve Bank of India (RBI) for the first half of this financial year.

In its monetary policy for 2011-12, released earlier this month, RBI said that inflationary pressure would continue to sustain for some more months before moderating to around 6 per cent by March 2012.

Food inflation, which accounts for nearly 15 per cent of overall WPI inflation, stood at 7.70 per cent for the week ended April 30.

The prices of primary articles - food, non-food articles and minerals - shot up by 12.05 per cent on an annual basis, according to the official data released on Monday.

Among primary articles, food items went up 8.71 per cent, while non-food primary articles rose by over 27 per cent. Minerals were up by 7.41 per cent. Onions were cheaper by 6.37 per cent on an annual basis, while potatoes were down by 0.54 per cent. However, other food and non-food primary articles saw a rise in prices.

During the month, fuel and power prices went up 13.32 per cent, driven mainly by 21.81 per cent rise in petrol prices and a 11.31 per cent jump in cooking gas (LPG) rates.

The manufactured goods group index rose 6.18 per cent on an annual basis. Manufactured items have the highest weight of 64.9 per cent in the WPI.

While leather and leather products were down 1.18 per cent, other items saw a surge in prices. Cotton textiles were up 24.67 per cent and man-made textiles became 11.65 per cent more expensive year-on-year.

Headline inflation has been above 8 per cent since January 2010. The apex bank has already hiked policy rates nine times since March 2010, to tame demand and curb inflation.

In its monetary policy, RBI had also warned against a rise in prices of core (non-food) items, especially on account of rising global commodity prices.

The government last week hiked prices of petrol by Rs 5 a litre and an increase in diesel and LPG prices is also expected soon. Such a step is likely to add further pressure to the inflationary situation.