Sustaining a downward trend for third consecutive week, India's inflation stood at 12.1 per cent for the week ended August 30. For the previous week, the figure was 12.34 per cent. However, wholesale price index (WPI) released by the Ministry of Commerce and Industry indicated 0.3 per cent increase in the price index for primary articles.

While increase of 0.2 per cent was indicated for food items like fruits and vegetables, minerals posted 1.4 per cent increase (due to higher prices of iron ore). As per finance ministry statement prices of nineteen primary articles including rice, maize, onions, pulses and potatoes decreased while prices of other 61 primary articles did not rise.

The downward trend witnessed can be short-termed or could lead to definitive fall. But, nothing can be yet ascertained. Vis-à-vis the trend, the government attitude is "wait and watch" until the trend becomes faster. There is also the possibility that RBI may soften policy stance in the mid-term review.

RBI Governor D. Subbarao spoke on the need for containing inflation in order to sustain growth. According to him, the current downward  trend is to be accounted by both supply-side and demand-side factors. Prime Minister Manmohan Singh's Economic Advisory Economic Council (EAC)  is of the view that co-ordinated policy action can make 8-9 per cent decrease in inflation by March 2009.