NEW DELHI: Wholesale price-based inflation rose to a nine-month high at 5.11% for the week ended March 1, compared with the previous week’s level of 5.02%. This was on account of rise in prices of non-food articles such as raw rubber, cotton, mustard seed and certain manufactured products such as edible oil, ghee, groundnut oil and aviation turbine fuel (ATF).
Attributing the rise to high imported commodities prices, Finance Minister P Chidambaram said the government was ready to take fiscal measures to control it while trying to make the country self-sufficient in key items. Speaking in the Lok Sabha, the FM also expressed hope that the new comprehensive WPI index, which is in the process of formulation, will take into account the current baskets of goods and services to reflect inflation more accurately.
This is the second week in a row that the inflation rate has crossed 5%, the target set by RBI for this fiscal. Inflation was at 6.51% in the corresponding period last year. Experts feel inflation has become a cost-push rather than a demand-pull phenomenon. There is need to reduce dependence on imports and augment domestic production, they said.
“Pressure on domestic prices is coming primarily from higher global prices of commodities such as energy, edible oil, for which we heavily depend on imports. If the upside pressure on global food and energy fuel prices continues, inflation would touch the 5.5% level by June,” said HDFC Bank chief economist Abheek Barua.
“Demand-side pressure has significantly eased, reflecting lower demand for leveraged financing. In such a situation, monetary measures would play a minor role,” he said. “There is a need to augment the supply of food by taking measures such as ban on export of some products, and boost agri-productivity,” Mr Barua added.
“The dynamics of growth and inflation are gradually becoming more complex with regard to the monetary policy,” said Kotak Mahindra chief economist Indranil Pan. We expect the central bank to keep rates unchanged at its April policy meeting, he added.
During the week under review, the index of manufactured products, accounting for 64% in the inflation basket, rose by 0.2%, while the index for primary articles rose by 0.3% due to higher prices of non-food articles group.
The index of fuel, power and lubricants rose by 0.1%, due to high ATF prices by 6%. The inflation figure for the week ended January 5, 2008, has been revised to 4.26% from the provisional estimate of 3.79% as WPI finally stood at 217.6 points compared with the earlier calculation of 216.6. Among manufactured products, prices of rapeseed oil, mustard oil and imported oil went up by 8% and 6% while khandsari and rice bran oil moved up by 2% each.
Prices of raw rubber, raw tobacco, rapeseed & mustard seed went up by 5% each while raw cotton and groundnut seed prices increased by 1% each. The index of the food article group declined by 0.1% as a result of lower prices of marine fish and eggs. However, gram, mutton and Barley prices surged 2% each.
Attributing the rise to high imported commodities prices, Finance Minister P Chidambaram said the government was ready to take fiscal measures to control it while trying to make the country self-sufficient in key items. Speaking in the Lok Sabha, the FM also expressed hope that the new comprehensive WPI index, which is in the process of formulation, will take into account the current baskets of goods and services to reflect inflation more accurately.
This is the second week in a row that the inflation rate has crossed 5%, the target set by RBI for this fiscal. Inflation was at 6.51% in the corresponding period last year. Experts feel inflation has become a cost-push rather than a demand-pull phenomenon. There is need to reduce dependence on imports and augment domestic production, they said.
“Pressure on domestic prices is coming primarily from higher global prices of commodities such as energy, edible oil, for which we heavily depend on imports. If the upside pressure on global food and energy fuel prices continues, inflation would touch the 5.5% level by June,” said HDFC Bank chief economist Abheek Barua.
“Demand-side pressure has significantly eased, reflecting lower demand for leveraged financing. In such a situation, monetary measures would play a minor role,” he said. “There is a need to augment the supply of food by taking measures such as ban on export of some products, and boost agri-productivity,” Mr Barua added.
“The dynamics of growth and inflation are gradually becoming more complex with regard to the monetary policy,” said Kotak Mahindra chief economist Indranil Pan. We expect the central bank to keep rates unchanged at its April policy meeting, he added.
During the week under review, the index of manufactured products, accounting for 64% in the inflation basket, rose by 0.2%, while the index for primary articles rose by 0.3% due to higher prices of non-food articles group.
The index of fuel, power and lubricants rose by 0.1%, due to high ATF prices by 6%. The inflation figure for the week ended January 5, 2008, has been revised to 4.26% from the provisional estimate of 3.79% as WPI finally stood at 217.6 points compared with the earlier calculation of 216.6. Among manufactured products, prices of rapeseed oil, mustard oil and imported oil went up by 8% and 6% while khandsari and rice bran oil moved up by 2% each.
Prices of raw rubber, raw tobacco, rapeseed & mustard seed went up by 5% each while raw cotton and groundnut seed prices increased by 1% each. The index of the food article group declined by 0.1% as a result of lower prices of marine fish and eggs. However, gram, mutton and Barley prices surged 2% each.
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