Decline in November 2010 inflation rate to 7.48% was mainly due to a sharp decline in inflation rate for primary articles (13% in November 2010 as against 16.68% in October).

While year on year inflation rate of rice declined in November 2010 compared to October 2010, prices of wheat, pulses, vegetables, potatoes in November 2010 declined compared to November 2009. However, prices of fruits; milk; egg, meat and fish; and non food articles are still exerting pressure on inflation rate.

Commenting on November Inflation figures, Mr Devendra Kumar Pant director of Fitch Ratings said that “Crude oil prices are touching USD 90/barrel and if it translates into retail price hike, it will increase inflation rate directly and indirectly through manufactured goods prices.”

He said that “Decline in inflation is mainly based on the increased availability of food crops and expectation of a good agricultural harvest may result is further decline in inflation in next few months. Although, inflation is still outside the government and RBI comfort zone, second quarter GDP growth and decline in inflation rate will lead to a pause in tightening of monetary stance.”

(Sourced from IRIS.com