New Delhi: Fall in Wholesale Price Index (WPI) has given some respite to the government but still it is not a comfortable situation.  In January, inflation based on WPI has come below 7 percent. According to data, it has come down to the lowest level of 6.55 percent in last 26 months. The Finance Minister has expressed hope of inflation coming down further in coming months.

Fall in the food prices has affected inflation figures in January. Seeing this, Reserve Bank of India may take decision on cutting interest rates. The Finance Minister has said that inflation is still not at acceptable levels, till the end of March inflation may come down to 6 percent.

Earlier it was estimated that inflation will come down to 7 percent till the end of March. In December 2011, inflation based on WPI was at 7.47 percent.  In January last year it was 9.47 percent. Current inflation figure is lowest till November 2009.  Among vegetables, potato and onion price fall played biggest role in inflation moderation. During this period, inflation on food products was 0.52 percent below zero. Whereas manufacturing products’ prices are still cause for concern, it contributes 65 percent load on WPI. On YoY basis, manufacturing product inflation was 6.49 percent in January; last month it was 7.41 percent.

From the same period last year to January this year food prices have gone down by 43.13 percent. On wholesale, potato and onion prices have gone down by 23.13 and 75.57 percent respectively. From last year, wheat prices have gone down by 3.48 percent. But edible oil and milk prices are still worrying the government.  The Finance Minister has said, “In coming years rise in the edible oil and milk prices may act as threat in controlling inflation. Rising prices of meat, egg and other protein products is also intriguing for the government.