New Delhi, November 6
Having continued its southward journey for five weeks in a row, inflation rose marginally to 10.72 per cent for the week ended October 25 from 10.68 per cent in the previous week.

The annual rate of inflation, measured by movement in the wholesale prices, was at 3.11 per cent in the corresponding period a year ago.

“Inflation of 30 essential commodities (taken together) marginally increased to 7.51 per cent as on the week ending October 25, 2008, from 7.47 per cent reported in the earlier week,” a finance ministry statement said, adding that prices of six out of 30 items increased during the week.

Although the index of the ‘fuel and power’ group remained unchanged, the primary articles group index increased to 11.41 per cent as compared to 10.92 per cent a week ago, the statement said.

Commenting on the inflation figure, Crisil principal economist D.K. Joshi said: “The declining trend would continue. The spike in inflation this week is just an aberration.”

The increase in inflation is not due to steps taken by the RBI to infuse liquidity in the system, he said, adding “the infusion in liquidity is non-inflationary as demand in the economy is coming down.”

Interestingly, broking house Edelweiss Securities said it expected the country to have near zero inflation in certain periods of the second half of 2009 on account of economic slowdown and falling commodity prices.

“Given the possibility of a further strong softening in commodity prices amid a marked global slowdown, domestic inflation can be zero or near zero during the second half of 2009,” the report said.

After declining for five consecutive weeks, the inflation showed a marginal increase as certain essential items like butter in the manufactured category became expensive.

The RBI in the last one month has infused liquidity to the tune of Rs 2,70,000 crore by cutting the cash reserve ratio by 350 basis points and statutory liquidity ratio by 100 basis points.

Among the primary articles, prices of rice increased by three per cent and tea by two per cent while vegetable prices were up almost one per cent. At the same time raw rubber was costlier by seven per cent, and raw cotton by three per cent.

Among other articles in the manufactured group, prices of gur increased, while woollen clothes became expensive by one per cent. Further, prices of automobiles, including motorcycle and auto-rickshaw, increased in the last week.

However, spices and cement prices showed a decline. Steel and fuel prices remained unchanged. The revised figure for inflation stood at 12.38 per cent for the week ended August 30 as against 12.10 per cent during the corresponding period last year.

Inflation was 9.32 per cent on May 31 and had surged into double digits in the first week of June after a hike in state-set retail fuel prices. In early August, the inflation rate had hit 12.91 per cent, the highest reading since annual numbers in the current data series became available in April 1995.