India’s annual inflation rate breaches 12-percent mark (Lead)

August 7th, 2008 - 8:46 pm ICT by IANS  

A file-photo of Manmohan Singh

New Delhi, Aug 7 (IANS) India’s annual rate of inflation overshot the 12-percent mark at 12.01 percent for the week ended July 26 amid a promise by Prime Minister Manmohan Singh that bringing down prices will be his government’s top priority. Data on wholesale prices released by the commerce ministry Thursday showed that the inflation rate had risen to this level from 11.98 percent for the week ended July 19 and 11.89 percent the week before.

At the present level, the inflation rate is at the highest level since May 1994.

The finance ministry, however, in a statement said: “Inflation, on a week-on-week basis, has continued to remain stable.”

“The rate of inflation for the week ending July 26 stands at 12.01 percent, marginally higher than the rate of 11.98 percent reported last week,” it said.

The Wholesale Price Index (WPI) based on final data for the week ended May 31 stood at 232.3, as compared to 231.1 (provisional), taking the annual rate of inflation to 9.32 percent as compared to 8.75 percent (provisional).

The main reason for the increase in the inflation rate during the week was higher prices of non-food articles, which jumped 0.4 percent.

After a lull, the WPI for fuel, power, light and lubricants rose 0.2 percent due to higher prices of furnace oil (3 percent).

Earlier in the day, Planning Commission deputy chairman Montek Singh Ahluwalia said inflation would fall below the 10 percent mark by this fiscal-end.

“Inflation is expected to moderate below the double-digit mark by the end of the current fiscal,” Ahluwalia told reporters on the sidelines of a function.

Finance Minister P. Chidambaram Wednesday told a gathering of Congress spokespersons that inflation would take a minimum six to nine months to moderate.

In his address at the conclusion of the trust motion July 22, the prime minister had listed nine main priorities for his government, in which inflation control was ranked first.

“My priorities are tackling the imported inflation caused by steep increase in oil prices. Our effort is to control inflation without hurting the rate of growth and employment,” he had said.

The Reserve Bank of India (RBI) has also raised interest rates more than a dozen times and asked commercial banks to keep more money against deposits in a bid to curb liquidity and inflation.

It raised its repo rate by 50 basis points July 29, and the cash reserve ratio - the minimum cash commercial banks have to retain against deposits - by 25 basis points in a bid to curb liquidity in the system and tame inflation.

β€œAt this juncture, a realistic policy endeavour would be to bring down inflation from the current level of about 11-12 percent to a level close to 7 percent by March 31, 2009,” RBI Governor Y.V. Reddy had said then.

But many international agencies like the Asian Development Bank (ADB) are not so sure. “Inflation will likely continue to plague much of emerging east Asia,” ADB said recently.

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