Inflation in manufactured items remains a concern: Pranab

Inflation in manufactured goods remains a matter of concern despite a marginal decline in December, Finance Minister Pranab Mukherjee today said, expressing hope that the overall rate of price rise would come down to 6-7% by March-end.

"The manufactured inflation and inflation in the power group of items have also declined, though only marginally, [and] therefore, continued to be a cause of concern," he said.

Prices of manufactured products, which account for 65% of the overall weight of the Wholesale Price Index (WPI) basket, went up by 7.41% year-on-year in December, as against 7.70% in the previous month.

"Headline inflation should be between 6 and 7% in March-end, 2012," Mukherjee said, adding he was confident the moderation in inflation would continue in the coming months.

Inflation, as measured by the WPI, fell to a two-year low of 7.47% in December, 2011, from 9.11% in the previous month.

As per official data, prices of food items rose at a lower rate of 0.74% in December, compared to 8.54% expansion in the previous month.

The decline in December inflation, Mukherjee said, is "mainly due to a significant decline in inflation for primary articles, including food inflation."

He said good industrial production numbers for November, at 5.9 per cent, and a sharp decline in inflation indicates some improvement in overall macro-economic parameters in the second half of FY12.

"This trend is likely to consolidate in the coming months with some policy correctives," the Finance Minister added.

He also said that softening of prices of manufactured goods would be gradual, even as non-food primary inflation witnesses a rapid decline.