Inflation falls to 4.89 pc, may prompt RBI to cut rates

Providing relief to common man as well as policymakers, softening food prices pulled down inflation to over three year low of 4.89 per cent in April, giving RBI space to further ease interest rates.
Declining for the third straight month, inflation has returned to the comfort zone of the Reserve Bank for the first time since November 2009, when it was 4.78 per cent.
The wholesale price (WPI) based inflation was 5.96 per cent in March, while in April, 2012, it was 7.50 per cent.
Food articles, which has a 14.34 per cent share in WPI basket, dropped to 6.08 per cent in April, from 8.73 per cent a month ago, as per official data released today.

Fuel prices rose 8.84 per cent in April, compared with an annual rise of 10.18 per cent in March.
Manufacturing inflation declined to 3.41 per cent in April from 4.07 per cent a month ago.

Encouraged by declining inflation, Finance Ministry made a case for further rate cut by the RBI to boost growth.
"... We do believe that RBI would look at this figure (April inflation)," Department of Economic Affairs Secretary Arvind Mayaram said.
He further said RBI Governor D Subbarao had stated that the central bank would be closely monitoring inflation figures and if there is dramatic change then it would take that into consideration during its next review.

The RBI is scheduled to announce its mid-quarter policy review on June 17.
Commenting on inflation numbers, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: "The pressure on inflation is softening and I expect it in the next few months, we will continue to see that ... It (5 per cent) is acceptable level of inflation".