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News >
Inflation fells to 4.85 pc |
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| The Government's efforts to control inflation
seem to be paying off as it fell below the 5 per cent mark for
the first time in eight months.The inflation fell to 4.85 per
cent mark for the week ending May 26 from 5.06 per cent in the
previous week, as food items and some manufactured products
turned cheaper.In fact markets were expected it to be at 5.05.
This sharp fall is unlikely to prompt a change in monetary
policy. |
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The
decline in inflation is also due to base effect of last year.
For the first time in many months the rate was less than what it
stood a year ago.
The wholesale prices-based index was at 4.99 per cent during the
corresponding week last year.
Inflation fell below five per cent much earlier than expected by
the government. Prime Minister Manmohan Singh had expressed hope
last month that the inflation rate would come down to 5 per cent
in a couple of months.
Food items like fruits and vegetables, barley, urad, bajra,
maida and suji turned cheaper as did some manufactured items
like bus chasis, chemicals and some metals.
Economists said the decline in the inflation was expected. "It
is very much on expected lines. Easing of inflation is because
of base effect and improvement in supply side," as quoted by PTI,
ABN Amro Bank Chief Economist Abheek Barua said.
However, increasing demand, as is evident from 9.4 per cent
economic growth during 2006-07, could result in price rise if
the supply side does not grow in proportion. The fear was also
expressed by Finance Minister P Chidambaram last week.
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