This Friday the 13th did not seem to have its draconian effect — at least where business and economy are concerned. Not only did the markets go up by 2 per cent, inflation for the week ending March 31 too fell below the psychological barrier of 6 per cent.

Inflation is down to 5.74 per cent against last week’s figure of 6.39 per cent.

However, there is no reason to rejoice as the wholesale price index — the weighted average of commodities which indicates rise in prices — has gone up to 210 from 209.8 (on March 24), thereby registering an increase of 0.1 per cent.

But if prices have increased as compared to the past week, then how is inflation down? Inflation is calculated on a year on year basis, which means that the current week’s data is compared to data of the corresponding week in the previous year.

Price index for the corresponding week last year, ending on April 1, 2006, was 198.6 while that for the week before (in 2006) was 197.2 (week ending March 25, 2006). Since inflation for this week has been calculated on a higher base, the percentage rise is lower. So the figure is a mere statistical phenomenon and does not reflect a decrease in prices.

“The decline in inflation figures is because of the base effect. Inflation is still above comfort levels,” says D K Joshi, principal economist, CRISIL.

Comparing the increase in WPI to the previous week, the hike is of 0.1 per cent. The increase is marginally less as compared to the previous weeks, March 24 saw an increase of 0.19 per cent as compared to the week before it. This means that though prices rose, they rose at a slower rate as compared to last week. The figure (0.1 per cent), though, is higher than the weekly average of 0.05 per cent for 2007.

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