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India's inflation rate likely to stay stable

India's year-on-year inflation rate measured by the wholesale price index fell in the week ended June 23 and analysts said they expect it to remain stable in the months ahead because of a poor demand outlook.

Data released by the commerce and industry ministry on Sunday showed the inflation rate, as measured by the wholesale price index, fell to 5.03 per cent in the week from 5.23 per cent the previous week.

The rate was 6.62 per cent in the corresponding week last year.

"The fall is due to the lack of demand in the economy. It's a combination of factors, our own slowing economy and also due to the global slowdown," Arun Kumar, economist with the New Delhi-based Jawaharlal Nehru University, told Reuters.

The official wholesale price index for all commodities (base 1993-94=100) for the week ended June 23 stood at 160.7 against 160.9 for the previous week.

Kumar said the inflation rate would continue to hover around the 5-6.0 per cent levels as manufactured goods would remain depressed because of the slowdown in industrial production.

India's industrial output growth in April slumped to 2.7 per cent from 6.5 per cent in the same month last year.

India's inflation rate has hovered around the present levels after hitting 10-year highs in February. It touched 8.57 per cent in the week ended February 10.

Kumar said there was little possibility of price pressure in the coming months in view of excess foodgrain stocks.

The index for the manufactured goods remained static at the previous week's level of 143.7. The index of fuel, power, light and lubricants was also unchanged at 222.7.

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