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Inflation drops to 5.91%

Lowest in almost last 10 months; Downward movement to continue India's wholesale price index (WPI) dropped to 5.91% for the week ended December 27, 2008 from 6.38% for the week ended December 20, 2008,lowest in almost last 10 months.

The index number of Primary articles and manufactured products declined week-on-week for the week ended December 20, 2008, whereas it was flat for fuel groups.We expect headline Inflation (read WPI) to continue to fall at an accelerated pace before touching 2.0-2.5% levels by the end of FY09.

We also expect continuation of monetary and fiscal policies. Although not much scope is left for any more fiscal stimulus on Keynesian philosophy,our planners are likely to apply more of monetary instruments.

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