Fruits And Sea Fish Declined During The Eases Further - Nov 28, 2008

The inflation slipped for the third successive week to over a five-month low of 8.84% for the week ended Nov 15 as against 8.90% of previous week, raising the hopes for further cut in key rates by the central bank. The inflation declined by 0.06 per cent from the previous week on account of drop in prices of metals, fruits and some manufactured items such as imported edible oil and rubber.The inflation was 3.35 per cent during the corresponding period a year ago.

The index of ''fuel, power, light and lubricants'' remained unchanged during the week, while the prices of fruits and sea fish declined during the week. Among the food items, prices of moong, rice and vegetables firmed up during the week. The prices of items in the textile group and some chemicals items, too, became expensive. RBI has injected Rs 2,75,000 crore since October through various policy instruments such as cut in mandatory deposits that banks keep with the central bank and reduction of funds that banks park in government securities.

In addition, it has also reduced the short-term (repo) lending rates indicating soft interest rate regime. The industry as well as the banks are demanding further cut in key rates to fuel growth and declining inflation may prompt the RBI to further ease monetary policy to arrest economic slowdown.