Petro price cut to ease inflation: FM

Finance Minister P Chidambaram on Wednesday hoped that the reduction in petrol and diesel prices would to some extent help ease inflation.

Reacting to the government announcing a Rs 2 per litre reduction in petrol and Re 1 in diesel prices from midnight tonight, he said that "it should help in easing (inflation) to some extent, but it (inflation) is mostly driven by primary products".

Primary articles, comprising two categories of food articles and non-food articles, have a weight of 22.02 per cent in wholesale prices index on which inflation is based.

Petrol and diesel are part of fuel, power, light and lubricants category, which has a weight of 14.23 per cent.
Manufactured products have 63.75 per cent weight in WPI. But during the last few months, inflation has risen mainly due to rise in prices of primary products, particularly wheat and pulses.

Inflation declined moderately to 5.29 per cent during the week ended November 11 from 5.30 per cent in the previous week, according to latest official figures. The Reserve Bank has projected inflation to remain between 5-5.5 per cent this fiscal.

The government intends to bring it down towards four per cent mark in due course. In fact, inflation was 4.09 per cent during a year ago period -- November 12, 2005.