Driven by higher prices of essential food items like milk, cereals, pulses, fruit and vegetables, inflation rose to (-)0.12 per cent for the week ended August 29 and is expected to move to positive territoryin the next couple of weeks.
The wholesale price inflation remained in the negative zone for the 13th week in a row, due to high base as it stood at 12.38 per cent a year ago. Finance Minister Pranab Mukherjee had earlier described negative inflation as only a 'statistical advantage'.
During the week, prices of eggs moved by four per cent, fish-marine by two per cent, milk, fruits and vegetables by one per cent each.
Vegetable, when compared with the period a year ago, however, turned expensive by 44 per cent. Sugar, khandsari and gur turned expensive by 35.2 per cent, pulses by 20 per cent and cereals by 12.6 per cent.
"It is in line with the expectation. The inflation is likely to move in positive territory within two weeks," Crisil Principal Economist D K Joshi told PTI.
According to analysts, inflation would be higher than RBI projection of 5 per cent by the end of March 2010.
Inflation is likely to be in the range of 6.5-7 per cent by March, 2010, said Yes Bank Chief Economist Shubhada Rao.
Economists said the RBI is likely to retain monetary stance for the time being and may tighten money supply only in the last quarter of this fiscal.
"I don't rule out possibility of cash reserve ratio hike during the last quarter of 2009-10," Rao said.
During the week, prices of soybean oil increased by 3 per cent, ghee, groundnut oil and imported edible oil rose by 1 per cent each.
Household items like laundry soap prices rose up by 35 per cent, detergent by 17 per cent, tooth paste by 6 per cent.
At the same time, fodder turned expensive by 13 per cent leading to an increase in the prices of milk while prices of mustard seed by 1 per cent.
However, salt became cheaper by four per cent, sugar, dry cell, cement and tractors by one per cent each.
Among metal items, lead ingots turned expensive by 6 per cent, steel ingots by 4 per cent, aluminium ingots by two per cent while ferro manganese prices dipped by 53 per cent and nuts and bolts by 1 per cent.
Fuel, power light and lubricant group remained unchanged at the previous week level.
Year-on-year, prices of milk have gone up by 10.2 per cent over last year, while spices were more expensive by about 8.5 per cent. Among manufactured food products, processed fish turned dearer by more than 42.7 per cent.
Inflation for the week ended July 4 has been revised upward to 0.75 per cent from (-)1.21 per cent estimated provisionally.
Image: A man sells pulses. | Photograph: Reuters
