Headline inflation to fall further in Feb: Montek

Encouraged by moderation in inflation in January, the Planning Commission today forecast continuation of the trend in the coming month due to decline in the cost of onion and other vegetables.

"I am absolutely clear that in February the inflation will come down further," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters here.

The headline inflation or Wholesale Price Index (WPI) declined marginally to 8.23% in January from 8.43% in the previous month as per the date releases today.

Explaining the reason for spike in headline inflation in January, Ahluwalia explained, "In January, for three weeks basically prices of onions and vegetables were high."

He said, "The prices of primary articles were high because of the impact of onions and vegetables. These things have very small weight but the shooting up of price of these products was quite excessive."

According to Ahluwalia, the headline inflation would come down primarily because of easing of vegetable prices. He pointed out that the prices of onions in February have crashed.

On low industrial growth in past months he said, "I do agree that for two months it has been low. We need to watch if there is recovery or not. Certainly if it doesn't happen we need to look at what is that is holding up the manufacturing (sector) production."

In his view, in the medium term during 12th Plan period (2012-17), the country should be aiming for better than double digit growth of manufacturing sector.

About the volatility in industrial growth numbers, he said, "IIP (Index of Industrial Production) number tend to vary from month to month."

Allaying fears that this trend could hurt the country's growth story, he said, "Whatever we have seen is consistent with the growth (8.5%) that we set for the current year 2010-11)."

He said, "I do agree that growth rate of the industry and growth rate of manufacturing with in industry are very important indicators."

"Future growth does depends on very strong growth in manufacturing and if for any reason it is felt that it is not happening, we should look at what the constraints are," he added.

The industrial growth slowed down to 1.6% in the month of December compared to 3.6% in November. However, during the April-December period this fiscal the industrial growth was 8.6% compared to 8% during the same period in 2009-10.