Business

Inflation moving fast towards the double-digit mark

‘Rabi arrivals should have a positive impact in bringing down prices'

With food prices showing no signs of abating and the impact of the fuel price hike in the latest budget making its presence felt, inflation moved fast towards the double-digit mark, touching 9.89 per cent in February, the highest in 16 months.

The wholesale price-based inflation stood at 8.56 per cent in January. This could well cross the double-digit mark in March, experts said.

Finance Minister Pranab Mukherjee had earlier said the across-the-board hike in excise duty by 2 percentage points in the budget would push up the wholesale price-based inflation by only 0.41 per cent.

Among food items, prices of sugar, pulses and potatoes increased by 55 per cent, 36 per cent and 30 per cent, respectively, in the 12 months ended February. The fuel price index shot up by over 10 per cent, mainly on account of higher prices of petrol and diesel. While petrol became dearer by 11.73 per cent, diesel prices increased 8.85 per cent. With inflation slowly spreading from food items to other areas, analysts say the RBI may tighten money supply further by raising interest rates in its April policy. Already, some banks, including ICICI Bank, the HDFC group and Bank of India, have raised the interest rates.

Inflation for food items was at 17.70 per cent in February, while for manufacturing it was 7.42 per cent. Sugar prices rose by 55.47 per cent on yearly basis. However, the government expects food inflation to cool down in the months ahead as it expects the rabi (winter) crop to be much better. ``Agriculture Minister has said the prospects of rabi crop are good and that would definitely have a positive impact in containing inflation and bringing down the prices,'' Union Commerce and Industry Minister, Anand Sharma said. He said rabi crops would start arriving in the market from April by then overall inflation could rise to 11 per cent.

The final inflation figures in January and February could be even higher, going by the prevailing trend. In December, the inflation was revised to 8.10 per cent from the provisional estimates of 7.31 per cent.

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Printable version | Feb 22, 2020 9:37:09 PM | https://www.thehindu.com/business/inflation-moving-fast-towards-the-doubledigit-mark/article245938.ece

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