Inflation eases further, but food items turn expensive

New Delhi, Mar 26 (PTI) Wholesale prices-based inflation
fell to a new low in over 30 years to 0.27 per cent, but
essential food items were dearer for reasons ranging from high
farm-gate prices to a short supply of pulses and coarse
cereals.

The Indian government said the fall in rate of price rise
was tied more to technical reasons than a change in
demand-supply, even as Indian apex bank Reserve Bank of India
(RBI) Governor D Subbarao said the Consumer Price Index (CPI)
is elevated.

"There are four indices of the CPI. Some of them are
still in double digits. Our own view is... there is no fear of
sustained deflation," he said at an industry conference here.

The 0.17 percentage point decline in inflation from 0.44
per cent (lowest since 1977-78) during the week ended March 7
was attributed partly to a high base effect as the rate of
price rise was 8.02 per cent in the same period a year ago.

"This is not because of lack of effective demand. It
is basically due to the base effect and that is not something
which we are unaware of, not something which we are not
factoring (in)," Economic Affairs Secretary Ashok Chawla said.

Food prices in the primary articles group (which are not
processed) rose 0.1 per cent on a weekly basis and a whopping
7.10 per cent on a yearly basis. In the manufactured category
(processed variety), food prices increased 1.2 per cent on
a weekly basis and 6.63 per cent year-on-year. PTI SHS
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