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Inflation dips below 5 p.c.

Special Correspondent

Further monetary tightening may be held in abeyance

NEW DELHI: In a major respite for the Government, the rate of inflation dipped below the five-per cent mark to 4.85 per cent for the week ended May 26 from 5.06 per cent in the previous week, in keeping with the easing of prices of food articles and certain manufactured products.

With the inflation rate touching such a low not only in 2007 but also for the first time in eight months, it is expected to ease the pressure on the Reserve Bank of India (RBI) and further monetary tightening measures may be held in abeyance for some time despite the burden of excess liquidity in the system.

While the fall in the inflation rate, as measured by the Wholesale Price Index (WPI), is owing to the effect of a high base along with improvement in commodity supplies, the decline appears to have set in much earlier than expected.

Meanwhile, the inflation rate for the week ended April 13 was revised upwards to 5.94 per cent from the provisional figure of 5.74 per cent.

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