Easing food prices pull down inflation to 9-month low of 4.68%

NEW DELHI: For the first time in nine months, inflation slipped below the psychological mark of 5 percent in February on easing prices of onion and potato, creating headroom for RBI to  cut interest rates in the monetary policy review on April 1 to boost sagging economic growth.
Inflation based on movement in the Wholesale Price Index (WPI) came down to 4.68 percent in February, from 7.28 percent a year ago. It was 5.05 percent in January 2014.
“Need to watch inflation carefully… Happy that overall inflation is coming down,” Finance Minister P Chidambaram said while expressing satisfaction over improvement in the price situation ahead of the general elections.
Food inflation, which has been a major cause of concern for the government, dropped to 8.12 percent in February, compared to 8.8 percent in January as the rate of price rise slowed in almost all items, except fruits, rice and milk.
Inflation, which is on decline since December, was 5.05 percent in January. Prior to February, the lowest WPI was recorded in May 2013 at 4.58 percent. In June, it had inched up again to 5.16 percent.
As per the data released today, rate of price rise for onions – on annual basis – contracted 20.06 percent in February. Similarly rate of price rise in potato slowed to 8.36 percent.
The overall inflation in the vegetable basket dropped to 3.99 percent, from 16.6 percent in January. There was also a drop in prices of pulses, cereals and wheat.
However, fruits, milk and other protein-rich items like egg, fish and meat became costlier in February compared to the previous month.
Inflation in the manufactured items, like sugar and edible items, was 2.76 same as in January.
Commenting on the fall in WPI inflation, Deputy Chairman of Planning Commission Montek Singh Ahluwalia said: “This is clearly a good news. It shows that this area (price situation) which was not an area that we were comfortable, is now getting into more comfortable range.”                     —PTI