New Delhi: The Government's efforts to control inflation seem to be paying off as it fell below the 5 per cent mark for the first time in eight months.
The inflation fell to 4.85 per cent mark for the week ending May 26 from 5.06 per cent in the previous week, as food items and some manufactured products turned cheaper.
In fact markets were expected it to be at 5.05. This sharp fall is unlikely to prompt a change in monetary policy.
The decline in inflation is also due to base effect of last year. For the first time in many months the rate was less than what it stood a year ago.
The wholesale prices-based index was at 4.99 per cent during the corresponding week last year.
Inflation fell below five per cent much earlier than expected by the government. Prime Minister Manmohan Singh had expressed hope last month that the inflation rate would come down to 5 per cent in a couple of months.
Food items like fruits and vegetables, barley, urad, bajra, maida and suji turned cheaper as did some manufactured items like bus chasis, chemicals and some metals.
Economists said the decline in the inflation was expected. "It is very much on expected lines. Easing of inflation is because of base effect and improvement in supply side," as quoted by PTI, ABN Amro Bank Chief Economist Abheek Barua said.
However, increasing demand, as is evident from 9.4 per cent economic growth during 2006-07, could result in price rise if the supply side does not grow in proportion. The fear was also expressed by Finance Minister P Chidambaram last week.
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