Inflation falls to eight percent from previous week's 8.4 pc

Inflation fell for the fifth consecutive week to a seven-and-a-half-month low of 8 per cent due to cheaper food items, justifying the RBI stance to ease money supply to shift bias towards boosting growth instead of controlling prices.

Wholesale price inflation came down by 0.40 per cent for the week ended on 29th November, from 8.40 per cent a week ago and is expected to come down further when the data is released next week, as then fuel prices cuts would also be reflected.



In fact, the rate of price rise in all certainty is expected to moderate substantially with cascading effect of

fuel price cut and four per cent across the board excise duty reduction getting mirrored in the data in subsequent weeks.



"Policy responses to inflation has brought down the inflation below nine per cent and we expect further reduction," Commerce Minister Kamal Nath said in New Delhi, adding it was a good sign.



Many food items like vegetables, fruits, gram, barley, unrefined oil, gur and rapeseed and mustard oil turned less costlier, even as most other indices either rose or remained unchanged.



However, even then food inflation for the week was higher at elevated level of 10.52 per cent compared to 10.48

per cent a week ago.



Incidentally, the inflation was at 3.89 per cent during the corresponding period a year-ago.



Ever since the collapse of Lehman Brothers in mid-September, RBI has been taking measures to ease money supply by reducing short-term rates and reserve ratios, reversing its earlier stance of tight monetary policy to tackle rising inflation.



In fact, unrefined oil prices declined by 12 per cent, vegetables by 3.5 per cent, gur by three per cent and fruits by 0.5 per cent, among other food items.



Some food items like ragi, urad, bajra, maize and groundnut oil turned expensive.



Prices of non-food items in the primary articles category like raw rubber and copra also declined.



However, prices of most manufactured products like paper, rubber, plastic and chemicals rose. But non-metallic minerals turned cheaper.



Prices of fuels remained unchanged this time, but it would be reflected in the data to be released next week and is expected to bring down inflation substantially.



While prices of petrol was cut by Rs 5 a litre, diesel was reduced by Rs 2 per litre with effect from 6th December.



It was administered hike in prices of petrol, diesel and cooking gas that catapulted inflation to double digits, where it remained for almost five months.



The declining inflation, which would also be abated by an across-the-board excise duty cuts, would give a leeway to RBI to target slowing growth, instead of inflation.



As such, RBI's target of bringing down inflation to seven per cent by this fiscal end is likely to be achieved much earlier.



In fact, its broader target of bringing inflation to tolerable limit of five per cent at the earliest may not be too far, analysts said.



The wholesale price index declined by 0.04 per cent to 233.6 points from 233.7 points for the previous week.



Inflation was revised to 11.49 per cent for the week ended October 4 from 11.44 per cent estimated earlier as the index underwent a change from 239.6 points to 239.7 points