ID :
26344
Fri, 10/24/2008 - 18:28
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http://m.oananews.org//node/26344
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Inflation eases to 11.07 pc; RBI may further cut repo rate
New Delhi, Oct 23 (PTI) Inflation fell to 11.07 percent
on cheaper food and crude but the government said it was still
high, even as the Reserve Bank of India (R.B.I.) is expected
to increase money supply in the system.
Four straight weeks of slow growth in prices may prompt
R.B.I. to cut benchmark rates when it reviews the mid-term
credit policy Friday, analysts said.
The wholesale prices based inflation declined by 0.36
percent for the week ended October 11, mainly driven by lower
prices of fruits and vegetables, pulses, spices, some
petroleum and manufactured products. It was 11.44 percent in
the previous week.
"Inflation is still high, but what is happening now --
moderation in crude and commodity prices -- will have an
impact on consumer prices as well," Finance Minister P.
Chidambaram told reporters here.
Department of Economic Affairs Secretary Ashok Chawla
said inflation was expected to come down to 9.5 to 10 percent
by December end.
Inflation of 30 essential commodities declined to 7.81
percent as on the week ending October 11 from 7.88 percent
reported in the earlier week, a statement from the Finance
Ministry said.
There was a decline in the prices of seven of these
commodities and prices of other 16 commodities remained
unchanged, it added.
According to analysts, R.B.I. may further cut repo
(short-term lending) rate or Statutory Liquidity Ratio
(percentage of deposits banks are required to invest in the
government securities).
"In this scenario, it is possible that the R.B.I. may cut
S.L.R. by 100 basis points," Crisil Principle Economist D.K.
Joshi said.
Inflation figure came three days after R.B.I. announced
cut in repo rate by 100 basis points to 8 percent signalling
softening of interest rates.
Besides, R.B.I. has taken a series of the liquidity
infusion measures including slashing Cash Reserve Ratio by 250
basis points thereby unlocking about Rs 1,00,000 crore in the
cash- starved banking system.
The only concern going forward remains the declining
Rupee, Joshi said, adding, it would make import costlier.
Rupee hits all-time low of 49.68 against U.S. dollar in
early trade Thursday.
However, government feels that the declining trend in
inflation is expected to continue.
Finance Minister P. Chidambaram in a reply to Lok Sabha
had said, "it is expected that the declining trend would
continue in the coming months."
During the week, prices of fruits and vegetables, urad
and eggs declined by two per cent each, while bajra spices
fell by one percent each. However, tea was expensive by 7
percent, rice and masur by one percent each.
At the same time raw rubber prices fell by 19 percent,
sunflower by 5 percent and minerals like barytes slipped by 11
percent while iron ore prices softened by two percent.
Among fuel group, prices of furnace oil by two percent
pulling down the group index by 0.1 percent.
In the manufactured products category, imported edible
oil was cheaper by 7 percent, oil cakes and cotton seed oil
by 5 percent.
on cheaper food and crude but the government said it was still
high, even as the Reserve Bank of India (R.B.I.) is expected
to increase money supply in the system.
Four straight weeks of slow growth in prices may prompt
R.B.I. to cut benchmark rates when it reviews the mid-term
credit policy Friday, analysts said.
The wholesale prices based inflation declined by 0.36
percent for the week ended October 11, mainly driven by lower
prices of fruits and vegetables, pulses, spices, some
petroleum and manufactured products. It was 11.44 percent in
the previous week.
"Inflation is still high, but what is happening now --
moderation in crude and commodity prices -- will have an
impact on consumer prices as well," Finance Minister P.
Chidambaram told reporters here.
Department of Economic Affairs Secretary Ashok Chawla
said inflation was expected to come down to 9.5 to 10 percent
by December end.
Inflation of 30 essential commodities declined to 7.81
percent as on the week ending October 11 from 7.88 percent
reported in the earlier week, a statement from the Finance
Ministry said.
There was a decline in the prices of seven of these
commodities and prices of other 16 commodities remained
unchanged, it added.
According to analysts, R.B.I. may further cut repo
(short-term lending) rate or Statutory Liquidity Ratio
(percentage of deposits banks are required to invest in the
government securities).
"In this scenario, it is possible that the R.B.I. may cut
S.L.R. by 100 basis points," Crisil Principle Economist D.K.
Joshi said.
Inflation figure came three days after R.B.I. announced
cut in repo rate by 100 basis points to 8 percent signalling
softening of interest rates.
Besides, R.B.I. has taken a series of the liquidity
infusion measures including slashing Cash Reserve Ratio by 250
basis points thereby unlocking about Rs 1,00,000 crore in the
cash- starved banking system.
The only concern going forward remains the declining
Rupee, Joshi said, adding, it would make import costlier.
Rupee hits all-time low of 49.68 against U.S. dollar in
early trade Thursday.
However, government feels that the declining trend in
inflation is expected to continue.
Finance Minister P. Chidambaram in a reply to Lok Sabha
had said, "it is expected that the declining trend would
continue in the coming months."
During the week, prices of fruits and vegetables, urad
and eggs declined by two per cent each, while bajra spices
fell by one percent each. However, tea was expensive by 7
percent, rice and masur by one percent each.
At the same time raw rubber prices fell by 19 percent,
sunflower by 5 percent and minerals like barytes slipped by 11
percent while iron ore prices softened by two percent.
Among fuel group, prices of furnace oil by two percent
pulling down the group index by 0.1 percent.
In the manufactured products category, imported edible
oil was cheaper by 7 percent, oil cakes and cotton seed oil
by 5 percent.
