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| Inflation 40 months high | | | New Delhi | Apr 11
Much to the chagrin of the government, unabated rising prices of vegetables, food articles and steel pushed the inflation to a 40 month high of 7.41 per cent, casting a shadow on economic growth.
Growing for the eighth consecutive week, inflation, based on wholesale price index, rose by 0.41 per cent in the week ended March 29 from 7 per cent in the previous week, a development that could lead to tightening of the monetary policy likely to be announced this month by RBI.
Inflation, which was 6.54 per cent a year-ago, last touched 7.76 per cent during the week ended November 6, 2004.
The common man was affected most by the surging prices of vegetables that showed an increase of 4.1 per cent during the week, while spices and pluses became dearer by 1.2 per cent and 1.8 per cent respectively in the wholesale market.
Price rise in these commodities would be much higher in the retail market going by the traditional difference in WPI and consumer price index.
Prime Minister Manmohan Singh yesterday admitted that surging food prices were making it difficult to manage inflation but ruled out any "blind controls".
To make things difficult for the economy, steel, alloys, and other metals led the rising prices in the industrial sector.
While steel prices shot up by 5.6 per cent, basic metals became dearer by about five per cent during the week even as the government went into a tizzy to find solutions through a slew of fiscal measures and supply side management.
Despite the fiscal measures taken by the government to ease inflation, the rate has nearly doubled in less than three months of 2008.
The annual rate of inflation, which stood at 3.79 per cent at the beginning of January according to official data, has gone up by 3.62 per cent with highest increase of 2.39 per cent being recorded during the four weeks ended March 29.
Earlier during the month, the government announced a host of fiscal measures like scrapping import duty on crude edible oils and banning export of non-basmati rice and pulses.
Although the fiscal measures taken by the government is not reflected in the week under review, Manila-based Asian Development Bank expects these measures to influence prices only by the month-end.
Fiscal measures taken could have significant impact on the pulses, oil seeds, rice and some other products. Going forward, the inflation rate is expected to come down by 70-80 basis points during April, HDFC Bank Chief Economist Abheek Barua said.
During the week, prices of masur and urad went up by three per cent, wheat and fish marine each rose by one per cent. However, prices of milk and maize softened by one per cent. |
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