The Hindu : Front Page : Inflation inches up to 12.14%

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Friday, Sep 19, 2008
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Inflation inches up to 12.14%

Special Correspondent

Rise in prices of vegetables, wheat, imported edible oils

Uptrend in prices may force RBI to further tighten money supply
Keep your fingers crossed like I do: Chidambaram

NEW DELHI: After declining for three weeks in a row, the rate of inflation inched up marginally to 12.14 per cent for the week ended September 6 against the previous week’s 12.10, mainly owing to rise in the prices of vegetables, wheat, certain pulses, imported edible oils and mutton, among others.

Despite the marginal rise in WPI-based inflation, even in the wake of a decline in global crude oil prices, the government described the data movement as “stable”.

“Inflation on year-on-year basis remained stable at 12.14 per cent for the week ended September 6 compared to 12.10 per cent reported a week earlier and 12.63 per cent for the week ending August 9, 2008,” the Finance Ministry said in a statement here on Thursday.

While the prices of vegetables were up six per cent, wheat and urad rose by three per cent. The prices of fire clay, in the minerals group, surged by 37 per cent. On a week-on-week basis, inflation of the 30 essential items went up to 7.72 per cent during the week from 7.52 a week ago, mainly owing to rice, wheat, moong, masoor, gram, urad, potatoes and salt turning dearer, the statement noted.

Perhaps sensing the marginal rise in the WPI earlier during the day, Finance Minister P. Chidambaram said: “Do not count your chickens before they are hatched. Keep your fingers crossed like I do. I keep my fingers crossed.”

Evidently, inflationary pressures still prevail in the economy and the uptrend in prices may force the Reserve Bank of India (RBI) to further tighten money supply during its mid-term review next month. In the event, the RBI may again hike the amount of cash that banks are required to keep with the apex bank as a mandatory requirement under the cash reserve ratio (CRR).

The Ministry’s statement pointed out that the 52-week average inflation during the week ended September 6 stood at 7.30 per cent against 5.42 and 4.47 per cent in the previous two years, respectively. This, it said, was mainly due to high fuel and power prices. The prices of manufactured items stood at 7.09 per cent against 5.41 a year ago.

Meanwhile, the annual rate of inflation, as measured conventionally, was revised to 12.13 per cent from 11.89 per cent, as estimated provisionally for the week ended July 12.

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