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February 27, 2000

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Inflation rate plunges to 20-week low

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The inflation rate receded further by 0.19 per cent to 20-week low to touch 2.37 per cent on February 12 due to considerable decline in prices of manufactured products and primary articles. It was 2.56 per cent the week before.

It was the lowest inflation rate recorded since October 2, 1999, when it stood at 1.95 per cent. However, it was slightly above the five per cent mark at 5.12 per cent during the corresponding week in 1999.

The recent decline in the inflation rate was due to substantial slump in prices of tea, eggs, raw hides, copra, kardi seed, soyabean, raw wool, raw rubber, gur, coconut oil and pistons. But the prices of raw silk, raw skins, hessian, sacking bags, ayurvedic medicines and synthetic rubber saw a jump in their prices during the week under review.

After touching the 32-week high of 3.31 per cent on January 15, the inflation rate had been declining steadily for the last four weeks since January 22. It has shed 0.94 per cent during this period.

The Institute of Economic Growth predicts that inflation rate may touch 3.26 per cent next month. It points out that it had been hovering between 2.7 and 2.8 per cent for the last few months.

It says the inflation rate may settle down between three to four per cent but its stability will depend upon the performance of winter crops.

A good harvest may keep a lid the inflation rate but at the same time it warns a poor crop may push up the inflation.

Leading economists fear that inflation may spurt by April 2000 and cross four per cent during the first quarter of 2000-2001.

UNI

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