India`s wholesale price index (WPI) based Inflation moved to 3.01% for the week ended November 24, as against 3.21% in the previous week. The annual rate of inflation stood at 5.55% a year ago.
Headline inflation is low due to cheap price of vegetables and essential food items.
Moreover, India`s inflation remains modest due to consistent efforts by the centre as well as the Reserve Bank of India (RBI).
Finance Minister P Chidambaram said that maintaining price stability have always been a top priority for the centre. To contain inflation, the centre cut duties on essential items such as food items and cement to increase the supplies.
The Reserve Bank of India had tightened monetary policy, in order to tighten liquidity conditions. Huge capital inflows into the local bourses, had led the Rupee to gain for considerable period of time.
Appreciation of Rupee did hit the exporters on large scale, which led the centre to cut duties on essential items to increase supplies.
Also, although crude oil rose and touched USD 100 a barrel last month, centre did not pass the burden to consumers. Centre have not raised state-fuel price since one and half years.
Going forward, India`s exposure to troubled US subprime assets and related derivatives were negligible in comparison to many other economies, said Deputy Governor Rakesh Mohan.
He added, that RBI is maintaining an enhanced vigilance to be able to respond appropriately to the prevailing heightened uncertainties in global financial conditions.
Moreover, RBI`s aim in the medium term is to contain inflation at 5%.
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