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Inflation eases to 11.89%

July 24, 2008

Inflation for the first time since May eased by 0.02 per cent to touch 11.89 per cent mainly due to moderation in prices of certain food items like sea fish, tea and imported edible oils.

During the week ended July 12, inflation came down by 0.02 per cent from 11.91 per cent in the previous week. It was 4.76 per cent during the corresponding week a year-ago.

According to a finance ministry statement, out of 98 primary articles, prices of 10 items have shown a decline, while 54 items showed no increase.

The wholesale price index-based inflation declined marginally mainly on account of lower prices of imported edible oils, cotton seed oil, groundnut oil and spices.

However, certain other commodities like coffee, fruits and vegetables, mutton and certain pulses like urad, moong and arhar have became expensive during the week.

High inflation, which is ruling at 13-year high level, may force the Reserve Bank to further hike short-term lending (repo) rates as well as statutory deposit requirements when it reviews the credit policy on July 29.

RBI had already increased the repo and CRR rates by 0.50 per cent each to counter inflation on June 24.

Inflation has been rising continuously since February mainly fuelled by higher prices of fuel, food items and some important commodities like cement, iron and steel.

Image: A customer checks out different varieties of rice and pulses on display at a wholesale market in New Delhi | Photograph: Raveendran/AFP/Getty Images

Also read: All you wanted to know about financial planning

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