India's headline inflation rate, based on the Wholesale Price Index, rose to 4.10% for the week to Aug 11 from 4.05% a week earlier. The rise is on account of increase in prices of food articles, particularly vegetables.

In the year-ago period, the inflation rate was 5.07%. The latest inflation rate is above consensus estimates. This rate was seen unchanged from the previous week at 4.05%.In the week to Aug 11, index for all commodities was 213.4, up 0.1% from 213.1 a week earlier. In the corresponding week last year, the index had risen 0.1% to 205.0.

Prices of vegetables increased 5.1% during the week. The headline inflation has eased to the current level after hitting a two-year-high of 6.69% late January, primarily on high base.

The Reserve Bank of India is targeting an inflation rate of close to 5.0% for the current financial year to March. For 2006-07, the year-end inflation rate was 5.94% above the central bank's target of 5.0-5.5%. The government and the RBI have taken a series of monetary and fiscal measures in recent months to stem inflation, including raising interest rates and cutting duties. In the quarterly review of the annual policy on Jul 31, RBI said the fear of high inflation remained despite the decline in recent weeks.

The RBI raised banks' cash reserve ratio by 50 basis points to 7%, and removed the Rs 30 billion cap on reverse repo in a bid to suck out excess liquidity. In the week to Aug 11, the WPI for main commodity groups was as follows

Primary articles at 223.5, up 0.4% from 222.5 a week ago, food articles 221.8, up 0.7%, non-food articles 210, down 0.1% on week. Primary articles mainly comprise farm goods, and have 22% weight in WPI.

Fuel, power, light and lubricants at 322.1, unchanged from a week ago. The group has 14.2% weight in the WPI.

Manufactured products with 63.7% WPI weight was at 185.7, up 0.1% from 185.6 a week earlier.

FINAL INDEX

Final index for all commodities for the week to Jun 16 was 211.9 compared with the provisional estimate of 211.7. Consequently, the final inflation rate for the week was 4.13% compared with the provisional estimate of 4.03%.