Easing food prices pull down inflation to 9-mth low of 4.68%

For the first time in nine months, inflation slipped below the psychological mark of 5 per cent in February on easing prices of onion and potato, creating headroom for RBI to cut interest rates in the monetary policy review on April 1 to boost sagging economic growth.
Inflation based on movement in the Wholesale Price Index (WPI) came down to 4.68 per cent in February, from 7.28 per cent a year ago. It was 5.05 per cent in January 2014.
"Need to watch inflation carefully... Happy that overall inflation is coming down," Finance Minister P Chidambaram said while expressing satisfaction over improvement in the price situation ahead of the general elections.

Food inflation, which has been a major cause of concern for the government, dropped to 8.12 per cent in February, compared to 8.8 per cent in January as the rate of price rise slowed in almost all items, except fruits, rice and milk.
Inflation, which is on decline since December, was 5.05 per cent in January. Prior to February, the lowest WPI was recorded in May 2013 at 4.58 per cent. In June, it had inched up again to 5.16 per cent.
As per the data released today, rate of price rise for onions - on annual basis - contracted 20.06 per cent in February. Similarly rate of price rise in potato slowed to 8.36 per cent.

The overall inflation in the vegetable basket dropped to 3.99 per cent, from 16.6 per cent in January. There was also a drop in prices of pulses, cereals and wheat.

However, fruits, milk and other protein-rich items like egg, fish and meat became costlier in February compared to the previous month.
Inflation in the manufactured items, like sugar and edible items, was 2.76 same as in January.
Commenting on the fall in WPI inflation, Deputy Chairman of Planning Commission Montek Singh Ahluwalia said: "This is clearly a good news. It shows that this area (price situation) which was not an area that we were comfortable, is now getting into more comfortable range.