Inflation rate continues to decline and presently stands at 5.24% for the week ended January 3. It stood at 5.91% last week and relieved marginally on account of the fall in prices of almost all primary, manufactured and food articles.

The annual inflation rate stood at 4.26% during the corresponding week of the previous year.

The median estimate of 11 economists was for a 5.28% increase in WPI during the 12 months to January 3, as against 5.91% in the last week.

In June 2008, inflation raced into double digits after the administration increased fuel prices.

The inflation rate touched the peak level of 12.91% in the first week of august, leading to stiff monetary plan by the central bank in order to put control over the rising prices.  

But since mid-October, RBI slashed the repo rate by 350 basis points as the worldwide financial crisis and high borrowing expenditures took a toll on economic system.

Prices of all three major sectors of the wholesale price index (WPI), including primary articles, fuel and manufactured products showed decline during the week under review.

Petrol prices, which were slashed by 10% with effect from December 6, and diesel by 6%, contributed to ease the inflation rate. Prices of food articles are still increasing as per the data released by the Finance Ministry.

Many economists expect the inflation rate to fall below 2% by the end of March, sharply off the RBI’s target of around 7%.