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India hopeful of rate cuts despite marginal rise in inflation rate



02 February 2009 @ 6:10 am IST

Mumbai - India's annualized inflation rate rose marginally to 5.64 percent in the 12 months to January 17, slightly higher than the previous week's rate of 5.60 percent due to the lingering effects of a week-long strike called by truckers in the first half of this month.


A woman shops at a mall in Mumbai
A woman shops at a mall in Mumbai. Market analysts are betting that the central bank would cut key interest rates to ease liquidity squeeze and boost corporate borrowing and consumer spending despite India's annualized inflation rate rising marginally to 5.64 percent in the 12 months to January 17. (AP Photo)
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A year ago, the inflation rate stood at 4.45 percent.

According to government data released last Thursday, food articles, jet fuel and food products drove up the wholesale price index-based (WPI) inflation rate.

The index for the Primary Articles Group (which has a weight of 22.02 percent on the WPI or Wholesale Price Index) declined by .1 percent compared to the previous week on account of percentage decline in the indexes for food articles group (down 0.1 percent), non-food articles group (down 0.2 percent) and minerals group (down 2.6 percent).

However, the index for food articles group advanced by 0.1 percent.

Items that witnessed decline in prices were fish-marine (down 2 percent), gram and condiments & spices (down 1 percent each), raw rubber, rape & mustard seed and sunflower (down 1 percent each), limestone (down 52 percent) and magnesite (down 34 percent).

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