Today's Paper

Inflation eases to 11.89%

Ashok Dasgupta

NEW DELHI: Affording some relief to the UPA government on the price front soon after winning the trust vote, the rate of inflation eased marginally to 11.89 % for the week ended July 12 on account of a fall in the prices of certain food items such as tea, maize, potato, sea fish and imported edible oils.

With this, the nine-week-long surge in prices appears to have been halted, although the wholesale price index-based inflation still remains pegged at over double digits and a 13-year high. From 7.82 % for the week ended May 10, the inflation rate surged to 11.05 % in June following the hike in prices of petroleum products and jumped further to 11.91 % for the week ended July 5.

The WPI data released here on Thursday shows that but for certain other food articles such as fruits and vegetables, mutton, coffee and some pulses like urad, moong and arhar which turned more expensive, the moderation in the rate of inflation would have been more.

However, considering that the pressure on prices still persists and the rate of inflation may well touch 13% owing to rising prices of items such as steel, cement and cotton, the Reserve Bank of India is expected to tinker with the monetary tightening mechanisms to hold the price line while reviewing the credit policy on July 29.

According to HDFC Chief Economist Abheek Barua, inflation still remained a concern and “could even touch 13 per cent by October once the control over steel products is eased besides possible increase in prices of cement, edible oil and cotton after monsoon.”

A Finance Ministry statement said: “Out of 98 primary articles, the prices of 10 items have shown a decline, while 54 articles showed no increase.” As for manufactured products, 299 articles out of a total of 318 commodities showed no increase in prices during the week, while nine items turned cheaper.

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