Petro tariff cut helps put Indian inflation on the mat

INFLATION has begun to show signs of cooling off on account of cut in prices of petrol and diesel. The inflation rate fell to 6.05% for the week ended February 17 as compared to 6.63% in the week before. The government had reduced the prices of petrol and diesel by Rs 2 and Re 1 respectively on February 16. Inflation had peaked at 6.73% for the week ended February 3 after which it began to decline. Mr Saumitra Chaudhary, member, economic advisory council to the prime minister said: “While 45 basis points of the 58 basis points dip in inflation has come on account of petrol and diesel, the rest of the impact is because of the base effect”. The overall Wholesale Price Index (WPI) had gone up 196.7 in the week ended February 18, 2006 from 196.2 in the previous week of 2006. The WPI figures show that the index for fuels and lubricant group fell by 0.6% due to lower prices of petrol (4%), high speed diesel oil and light diesel oil (3% each). The index for the food articles group also declined by 0.4% due to lower prices of fish-marine and gram (4% each), fruits & vegetables and bajra (2% each) and moong and jowar (1% each). The index for manufactured group also declined by 0.1% due to 0.4% fall in prices of food products and 0.1% decline in prices of basic metals alloys & metal products. Last month, the government had cut import duty on cement, capital goods, steel, aluminium, copper and other industrial raw materials, as well as palm and sunflower oil. Economists say the fall has been triggered largely by a cut in prices of petrol and diesel.

courtesy:economictimes

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