Friday, August 26 2005 15:18 Hrs (IST) - World Time -

New Delhi: Inflation fell further to a new low of 3.13 per cent in the week ended August 13, 2005 from 3.35 per cent a week ago, due to cheaper iron ore, manufactured and essential non-food items.

The point-to-point Wholesale Price Index (WPI) based inflation fell during the second week of August from 8.29 per cent a year ago.

The WPI remained unchanged at previous week's level of 194.1 points but was higher than 188.2 a year ago.

The Government kept the final WPI estimate at the provisional level of 192.9 and inflation at 4.1 per cent for the week ended June 18, 2005.

The domestic prices were yet to be impacted by spiralling global oil prices.

Massive global demand and production problems in United States (US) refineries fuelled the global oil prices, which touched USD 67 a barrel during the week under review.

Senior Government functionaries like Finance Minister P Chidambaram, Petroleum Minister Mani Shankar Aiyar and Planning Commission Deputy Chairman Montek Singh Ahluwalia made a strong case for another round of hike in domestic fuel prices considering the increasing losses of oil PSUs.

While Chidambaram and Aiyar indicated that oil price hike was imminent, Ahluwalia said it would be fiscally irresponsible not to align domestic oil prices with global oil prices.

"Not raising oil prices would amount to running a hidden subsidy," Ahluwalia said, adding, "It would have an adverse impact in the long run."

Chidambaram had stated that there was no alternative, but to hike the prices of petroleum products and people have to share a part of the burden.

He also said that oil companies would incur a loss of around Rs 40,000 crore during this fiscal if the present trend in crude oil prices continued for some more months.