The New Nation - Internet Edition

PTI, New Delhi

Cheaper food products and some manufactured items dragged inflation to a 16-month low at 3.79 percent for the week ended August 25, raising expectations of a softening monetary policy stance by the central bank.

The wholesale price index, which stood at 3.94 percent for the week ended August 18, has remained below the four per cent mark for the second week in a row and is much lower than 5.27 percent in the corresponding week of last year.

Inflation was lower than the latest figure during the week ended April 29, 2006 at 3.59 percent

This has fueled expectations of a softening monetary stance by the Reserve Bank of India (RBI) as wholesale prices-based inflation has remained below its estimates for quite some time now.

RBI has projected inflation close to 5 percent for the current fiscal and 4-4.5 percent for the medium term.

Finance Minister P. Chidambaram had earlier said the government aims to keep inflation rate close to four per cent He had also said there would be pressure on food prices until production of wheat, rice and pulses was stepped up.

According to analysts, prediction of normal monsoon has given rise to expectations of a fall in food prices in the coming months. During the first quarter of this fiscal, farm sector witnessed a growth of 3.8 percent This indicated increase in supply of food items, which had been primarily responsible for the rise in inflation.

Among essential items, prices of wheat, which is being imported by the government due to fall in the stock of public distribution system, fell by one percent Besides, prices of fruits, vegetables, maize and fish declined by one percent

However, prices of food products in manufactured items like gur rose by 3 percent, while rice bran oil, gingelly oil and soyabean oil prices were up one percent Other commodities like sunflower were expensive by five per cent, while raw coton rates shot up by three per cent

Among manufactured items, prices of zinc declined by one percent, while zinc ingot moved down by two per cent Acids of all kind were cheaper by two per cent and carbon black by one percent However, cement prices firmed up by 0.2 percent, pipes and tubes were up by one percent, and ayurvedic medicine liquids by four percent

Inflation for the week ended June 30 figure was revised to 4.42 percent against the provisional figure of 4.27 percent as the wholesale price index finally stood at 212.8 points compared to provisional estimate of 212.5 points.