NEW DELHI, Nov 16: The annual rate of inflation continued to march southwards for the third uccessive week and fell to 3.23 per cent during the week ended November one.

In the last three weeks, inflation, based on the wholesale price index (WPI), has plunged by nearly a percentage point, taking it to striking distance of the all-time low of 2.97 per cent in 1986-87.

The fall, despite recent the hike in prices of petroleum products and rail freight, is being attributed to slackening of demand.

During the week, inflation fell by 0.22 percentage points to 3.23 per cent as aganst 3.45 per cent last week and 6.72 per cent during the corresponding week last year.

Meanwhile, the index for "all commodities" (base 1981-82=100) declined marginally to 329.6 (provisional) during the week from 329.7 (p) the week before.

The inflation based on the final index rose by 0.80 percentage points to four per cent for the week ending September six from 3.4 per cent the previous week as a result of the sharp hike in prices of petroleum products.

In the corresponding week, inflation rose by 0.60 percentage points to 4.2 per cent from 3.8 per cent on the provisional index. The final index for all commodities for the week was 329 compared to the provisional index of 329.7.Economists said the low inflation levels could be due to the slackening of demand.

Wherever prices are determined by the markets, it has remained stable.

Prices of primary articles and manufactured products increased by just 1.41 per cent and 2.72 per cent respectively during the year compared to 11.25 per cent for fuel, power, light and lubricants (FPLL).

The increase in FPLL is mainly due to the massive increase in administered prices of items like petroleum products and power during the year.

Leading research body the National Council for Applied Economic Research (NCAER), however, has predicted a pick-up in inflation in the second half of 1997-98.

NCAER has projected an average seven per cent inflation in the second half and an overall average of six per cent for 1997-98.

On a comparable basis, the inflation based on consumer price index for industrial workers (CPI-IW) for August remained at 4.7 per cent as against 3.9 per cent based on WPI during the same month.

During the reference week, the index for primary articles declined by 0.3 per cent to 338.4 from 339.0 on account of a fall in food and non-food articles.

The index for food articles dropped by 0.2 per cent to 384.8 from 385.7 due to a fall in prices of arhar and masur (-2 per cent each) and gram, urad, fruits and vegetables (1 per cent each).

However, during the week, prices of maize (2 per cent) and milk, condiments and spices (1 per cent) went up from the sub-group.

The index for non-food articles also declined by 0.2 per cent to 344.3 from 344.9 following the drop in prices of groundnut seed, raw hides and lac (-2 per cent each) and gingelly seed and raw rubber (-1 per cent each) as against the previous week.

Prices of cotton seed (2 per cent) went down during the week. The index for minerals went up by 0.1 per cent to 158.7 from 158.5. From the sub-group, prices of magnesite (15 per cent) and bauxite (9 per cent) shot up, while that of steatite (3 per cent) declined.

The index forfuel, power, light and lubricants remained unchanged at 370.7 for the sixth consecutive week. The index for the third major group in WPI, manufactured prodcuts, rose marginally during the week to 316.9 from 316.8.Under the group, the index for food products declined by 0.1 per cent to 324.6 from 324.8 due to the fall in prices of sui (rawa) (-5 per cent), maida, atta and rice bran oil (-3 per cent) and gur (-1 per cent).

Prices of bran and coconut oil (7 per cent each), bread (4 per cent), solvent extracted groundnut oil (2 per cent) and gingelly oil (1 per cent) went up during the week.

The index for textiles also declined by 0.1 per cent to 310.4 from 310.6 the previous week due to a fall in prices of wollen yarn (-2 per cent) and jute, hemp and mesta textiles (1 per cent each).

The index for chemicals and chemical products rose by 0.3 per cent to 269.6 from 268.9 as prices of agarbathi (9 per cent), sulphuric acid (3 per cent) and paints, enamels and varnishes (1 per cent each) went up during the week.

However, prices of caustic soda (-1 per cent) went down among the sub-group during the week.

The index for machinery and machine tools stood at 300.8 as against 300.7 the previous week. During the week, prices of mining machinery (3 per cent) went up.

The index for transport equipment and parts shot up by 0.4 per cent to 273.3 from 272.1 due to a rise in the price of car chasis (assembled) (5 per cent).The indices for all other groups remained unaltered at their respective previous week's level.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.