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India's inflation rate may fall on bumper crop

India's year-on-year inflation rate fell marginally in the week ended June 9 and analysts said it was likely to decline further around September when bumper crops would be harvested.

Data released by the commerce ministry on Sunday showed the inflation rate, as measured by the wholesale price index, fell to 5.44 per cent in the week from 5.52 per cent in the previous week.

The rate was 6.42 per cent in the corresponding week last year.

"I expect the inflation rate to remain stable around 5.5 per cent in the next six months," D H Pai Panandiker, president of the RPG Foundation, an economic think tank funded by private industry, said.

"But we may see a fall around September when the harvest season starts because by all accounts it is going to be another bump crop this year," Panandiker said.

The official wholesale price index for all commodities (base 1993-94=100) for the week ended June 9 stood at 160.8 as against 160.6 for the previous week. India's inflation rate has been near current levels after hitting 10-year highs in February. It touched 8.57 per cent in the week ended February 10.

Panandiker said he saw a possibility of an increase in the rate only if the federal government increased oil prices on the back of a global hike. "But that looks unlikely."

Analysts and industry groups have been urging the government to cut interest rates to take advantage of the low headline inflation rate and give a boost to the sluggish economy.

The index for manufactured goods fell marginally to 143.9 from the previous week's level of 144.0. The index for fuel, power, light and lubricants remained static at last week's level of 222.7.

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