Eco Survey Highlights: Inflation

Highlights

• Seen at 4.1 per cent this year
• Lower than 5.6 per cent last year
• Same level as previous year
• Mainly led by primary non-food items
• Fuel and power group prime contributors
• Investment goods inflation declines to 4.3 per cent
• Positive for investment

Overall inflation is expected to decline from 5.6 per cent last year to 4.1 per cent this year - the same as the previous year.

The composition will be different with much higher primary goods inflation, mainly because of primary non-food prices and lower fuel price inflation.

Prices have been declining since March, but have started inching up in the last two weeks, the Survey says.

The commodity group - fuel and power - has contributed to the rise in inflation.

Rising coal prices, and a pass through of high crude oil prices to petroleum products, even before the latest hike in petrol and diesel retail prices, was responsible.

On the positive side, inflation in investment goods has declined from 5. 5 per cent in 2006-07 to 4.3 per cent this year. This should spur investment, the survey says.