Primary Inflation Slips To 6.84% Rate Cut Hopes Brighten - Dec 19, 2008

Inflation plunged below 7 per cent to 6.84 per cent for the week ended December 6 2008, from 8 per cent of previous week. Huge drop in the fuel price index of 3.7 per cent led the fall. The market is expecting more cuts from the Reserve Bank of India as bond yields have dropped to the lowest since June 2004. Bond yields on Thursday (December 18) fell to 5.54 per cent as against 5.80 per cent on Dec 17. The decline in fuel prices was also supported by a drop in manufacturing and primary goods indices. The index for manufacturing was down 0.3 per cent on week-on-week basis while that of primary articles, which includes food prices, fell 0.4 per cent.