NEW DELHI: Costlier food and manufactured products — coupled with a weaker rupee — accelerated the annual inflation rate to a 13-year high of 11.63% for the week ended June 21. The rise in prices of food items like tea, cooking oil, vegetables and manufactured products like textiles, medicines, metals and chemicals fanned the unabated increase in wholesale price index (WPI) during the week.
Indicating that WPI, which tracks changes in the cost of living on a weekly basis, may have already scaled 12%, the government revised the inflation figure, measured for the week ended April 26, to 8.27% compared with the provisional estimate of 7.61%, an increase of 66 basis points.
Economists say that a further tightening of the monetary policy is expected later this month. Pressure is also building up for another increase in fuel prices. If crude oil prices head further north, it could push up inflation. Depreciation in the rupee is also making imports costlier, another contributing factor for inflation.The government again reiterated its commitment to tame inflation with minimum injury to growth. “One question that people ask often is that if indeed there is a trade-off between growth and containing inflation, where does the government stand. When inflation is above 11.5%, the priority for any responsible democratic government is to reduce inflation. There is no doubt about it. However, the endeavour is to see that growth is not compromised,” finance secretary D Subbarao said while speaking at the ET roundtable on inflation.
He said that the impact of surging inflation on growth will be less than what is feared by many. The finance ministry stated on Friday that headline inflation is high because main drivers continue to be petroleum products (as a result of high crude oil prices) and iron and steel products including iron ore.
Indicating that WPI, which tracks changes in the cost of living on a weekly basis, may have already scaled 12%, the government revised the inflation figure, measured for the week ended April 26, to 8.27% compared with the provisional estimate of 7.61%, an increase of 66 basis points.
Economists say that a further tightening of the monetary policy is expected later this month. Pressure is also building up for another increase in fuel prices. If crude oil prices head further north, it could push up inflation. Depreciation in the rupee is also making imports costlier, another contributing factor for inflation.The government again reiterated its commitment to tame inflation with minimum injury to growth. “One question that people ask often is that if indeed there is a trade-off between growth and containing inflation, where does the government stand. When inflation is above 11.5%, the priority for any responsible democratic government is to reduce inflation. There is no doubt about it. However, the endeavour is to see that growth is not compromised,” finance secretary D Subbarao said while speaking at the ET roundtable on inflation.
He said that the impact of surging inflation on growth will be less than what is feared by many. The finance ministry stated on Friday that headline inflation is high because main drivers continue to be petroleum products (as a result of high crude oil prices) and iron and steel products including iron ore.
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