Inflation eases marginally to 11.89%

Fri, Jul 25 01:00 AM

A thin slice of hope in the long battle to fight double-digit price rise surfaced on Thursday as the official inflation rate slipped to 11.89 per cent, a fall of 2 basis points (100 basis points is 1 percentage point). This fall is statistically insignificant but psychologically crucial.

Adding a dash of optimism was a global dip in benchmark crude that slid by more than $23 a barrel from its record high of $147.27 on July 11. The government may also take heart from a moderation in the prices of key food items like sea fish, tea and imported edible oils - items that are loaded with political burdens.

The inflation rate stood at 4.76 per cent in the corresponding week a year-ago. According to a finance ministry statement, out of 98 primary articles, prices of 10 items have shown a decline, while 54 items showed no increase.

The high rate of inflation, ruling at 13-year high level, could force the Reserve Bank of India (RBI) to further hike key lending rates. RBI had already increased its key short-term lending rate (the repo rate) and mandatory deposit rate (cash reserve ratio or the percentage of deposits banks need to keep with RBI) by 50 basis points each to tame the runaway price line.

RECOMMEND THIS STORY