The Hindu : Front Page : Inflation drops to 3.36%

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Friday, Feb 27, 2009
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Inflation drops to 3.36%

Special Correspondent

NEW DELHI: Continuing its downward movement, the rate of inflation slipped further to nearly a 15-month low at 3.36 per cent for the week ended February 14 from 3.92 per cent in the previous week, mainly owing to a host of food and manufactured products turning cheaper in the wake of depressed prices in a slowing economy.

Lowest since December

With the decrease in overall Wholesale Price Index-based inflation in the latest week — the lowest since the 3.1 per cent recorded for the week ending December 24, 2007 — being the outcome of all round fall in inflation rates, the Reserve Bank of India has enough cushion now to reduce its key policy rates to spur the economy which has been slowing down in the wake of the global financial meltdown.

Such a monetary measure by the apex bank is on the cards as the government now does not have the fiscal leeway to take any more steps to boost the sagging economy.

In fact, External Affairs Minister Pranab Mukherjee, who is holding additional charge of Finance, has also indicated in recent days that the Reserve Bank of India may “take appropriate policy action at the right time” as the prime lending rates of banks were too high. During the week, food articles turned cheaper by 0.3 per cent owing to fall in prices of maize by five per cent), barley by three per cent and fruit and vegetables by two per cent.

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