The Hindu : Front Page : Inflation creeps up to 11.63%

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Saturday, Jul 05, 2008
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Inflation creeps up to 11.63%

Special Correspondent

NEW DELHI: The rate of inflation crept up to touch another new 13-year high at 11.63 per cent for the week ended June 21 from 11.42 per cent the previous week, mainly on account of higher prices of cereals, fruits and vegetables and certain manufactured items such as edible oils, cement and iron and steel.

Although the wholesale price index-based inflation at this level was way above the 4.32 per cent pegged for the same week a year ago, the country’s bourses factored in the price spiral to close with substantial gains as nervous investors in the market were earlier anticipating an inflationary spurt to well over 12 per cent.

Hailing the lower-than-expected inflation, the markets pulled back by way of short-covering even in the wake of soaring global crude oil prices.

While the Bombay Stock Exchange’s 30-share Sensex smartly gained nearly 360 points to close at 13,454, the 50-share Nifty of the National Stock Exchange also rose by 90.25 points to end the day’s trading at 4,016.

The market euphoria, however, is likely to be short-lived as crude oil prices have been hovering in the region of $145 a barrel, giving rise to apprehensions that the WPI-based inflation could well cross the 12 per cent mark in the days to come on account of higher prices of petroleum products and food commodities.

Such fears stem from the fact that the current rise in prices has been on account of higher prices of unrefined oil which surged by 8 per cent and tea by 4 per cent while fruits and vegetables, sea fish, maize and bajra went up by 2 per cent each.

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