Inflation at 0.27%

The annual rate of inflation, calculated on point-to-point basis, stood at 0.27% for the week ended 14 March 2009 as compared to 0.44 % for the sequential previous week. It was 8.02% in the corresponding week of the previous year. The official Wholesale Price Index for all commodities for the week ended 14 March 2009 rose by 0.1% to 227.0 from 226.7 for the previous week. The major driver of the WPI is manufacturing index that rose by 0.2 % to 199.6 from 199.2 for the previous week. While food product, non-metallic mineral products, basic metals alloys and metal products group registered an increased for the week ended 14 March 2009 that of textiles group declined by 0.9 % to 139.3 from 140.5 for the previous week due to lower prices of cotton yarn-cones (4%). However, the prices of polyester staple fibre (1%) moved up. In addition to this The index for machinery and machine tools group declined by 0.2 % to 172.1 from 172.4 for the previous week due to lower prices of electric motors: phase one (5%), electric motors (3%) and electric motors: phase three (2%). Another major driver is primary article index that rose marginally to 245.6 from 245.5 for the previous week. The two major component of this is food articles and non-food articles. Among which the index for food articles group rose by 0.1% to 242.7) from 242.5 for the previous week due to higher prices of barley (2%) and bajra, maize, fruits & vegetables, masur, urad and rice (1% each). However, the prices of fish-marine and tea (3% each), moong (2%) and condiments & spices and gram (1% each) declined. The third major contributor to WPI that is index for fuel, power, light and lubricants remained unchanged at its previous week's level of 321.0. The week on week decline in the wholesale price index leads to disinflation situation in India and not the deflation in real terms. Disinflation is the phenomena where there is slowing of the rate at which prices increases. This occurs during a slowdown as sales drop. Disinflation is not to be confused with deflation, where prices actually drop. In case of India, drop in industrial production in January 2009 along with dismal performance by the consumer durable and capital goods throughout the year was due to slowing demand in domestic as well as in the external market. On the other hand, there is immense pressure on consumer price index. The index that give us the clear idea about the real price that consumer pay at market place.