Fuel price hike led to double digit inflation: Chidambaram

June 20th, 2008 - 3:43 pm ICT by IANS  

A file-photo of P. Chidambaram

New Delhi, June 20 (IANS) The finance ministry had cautioned the cabinet about the effect of raising fuel prices on India’s inflation, Finance Minister P. Chidambaram said here Friday soon after inflation reached 11.05 percent. He also hinted at stronger monetary measures. As inflation for the week ended June 7 hit a 13-year high, Chidamabaram told reporters: “The increase in petroleum product prices has contributed 94 percent to the inflation recorded.”

The central government had on June 4 raised petrol prices by Rs.5 a litre, diesel by Rs.3 and cooking gas by Rs.50 a cylinder.

“Double digit inflation was expected after the government decided to increase fuel prices,” Chidambaram said. “We had cautioned the cabinet about this.”

The finance minister said: “It’s a difficult time. More strong monetary measures are needed. The government is aware of the difficulties.”

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