Inflation falls to -1.3%; negative for third week in a row

Inflation fell to minus 1.3 per cent for the week ended June 20, staying negative for the third week in a row, due to a high base effect even as prices of food like fruit and vegetables rose compared to the same week last year.     

The rate of price rise was (-)1.14 per cent in the previous week.     

The decline in inflation could be partly attributed to high rate of price rise at 11.91 per cent in the corresponding week last year.

However, prices of food items like fruit and vegetables during the week ended June 20 rose by 0.6 per cent, while the non-food items became expensive by 0.3 per cent.     

Prices of fruit and vegetables rose by 11.19 per cent compared to last year. Prices of cereals increased by 12.39 per cent, pulses by 16.52 per cent and condiments and spices by 7.49 per cent.     

Besides, inflation could rise in the coming weeks with the government hiking prices of petrol and diesel by Rs 4 and Rs 2 yesterday. An increase in petrol and diesel prices leads to rise in prices of food items due to higher transportation cost.     

HDFC Bank Economist Jyotinder Kaur said, "Fuel price hike is likely to affect it by 35 basis points for the week ended July 4." 

Among non-food articles, the prices of fodder rose by 4 per cent, groundnut seed by 2 per cent and raw wool by 4 per cent. Prices in power, light and lubricants segments rose by 0.1 per cent.     

Manufactured products became dearer slightly by 0.05 per cent, textiles by 0.3 per cent and paper and paper products by 0.5 per cent.     

However, prices of food items like tea and fish marine declined by 4 per cent each during the week.     

On inflation Kaur said the rate of price rise is expected to be in the negative territory at least till September.     

"Inflation is on expected line and we expect it to remain in the negative territory till September."