India's headline inflation rate, based on the Wholesale Price Index, fell to a 71-week low of 3.79% for the week to Aug 25. The inflation rate was 3.94% a week ago and 5.27% a year earlier, the commerce and industry ministry said today. The fall is mainly on account of statistical impact of a high base. The high base effect is likely to push headline inflation rate further down in the coming weeks. The latest inflation rate is below consensus estimates. According to a NewsWire18 poll of 16 analysts, the inflation rate for the week was seen at 3.89%.

In the week to Aug 25, index for all commodities was 213.6, unchanged from a week ago. In the corresponding week last year, the index had risen 0.1% to 205.8.

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 the 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 recent decline.

In the week to Aug 25, the WPI for main commodity groups was as follows:

--Primary articles at 224.5, down 0.1% from 224.7 a week ago; food articles 223.3 down 0.2%; non-food articles 209.9, up 0.1% on week. Primary articles mainly comprise farm goods, and have 22% weight in WPI.

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

--Manufactured products--with 63.7% WPI weight--were at 185.6, unchanged from a week earlier. All numbers are provisional estimates, and may be revised after eight weeks.

FINAL INDEX
Final index for all commodities for the week to Jun 30 was 212.8 compared with the provisional estimate of 212.5. Consequently, the final inflation rate for the week was 4.42% compared with the provisional estimate of 4.27%.