India’s inflation at 41-month high of 7.41 percent

April 11th, 2008 - 8:11 pm ICT by admin  

A file-photo of Manmohan Singh

New Delhi, April 11 (IANS) India’s annual rate of inflation hit a 41-month high of 7.41 percent for the week ended March 29, from 7 percent for the week before, on account of higher food and commodities prices. The inflation rate, based on the official wholesale price index, is the highest since Nov 8, 2004, as per data released Friday by the commerce and industry ministry.

Significantly, the revised final data for the week ended Feb 2 suggests that the inflation rate for the week was actually 4.74 percent, as against 4.07 percent reported earlier based on provisional figures.

A detailed look at the data also reveals that in a matter of just one week, the prices of basic metals rose 3.8 percent, while prices of fruits, vegetables and lentils jumped 3 percent.

Since the data pertained to March 29, it did not reflect the measures taken by the government since March 31 when it cut import duties on a wide range of items including edible oils, while imposing a ban on exports of non-basmati rice.

The alarming data comes a day after Prime Minister Manmohan Singh said the steep increase in prices of food and essential items was making inflation management a difficult task that could hurt the country’s macroeconomic stability.

“Sharply rising food prices can slow down poverty alleviation, impede economic growth and retard employment generation,” the prime minister said at a global conference on agro industries Thursday.

“A steep rise in food prices will make inflation control more difficult and can hurt the cause of macroeconomic stability. The constituency for economic reform, so necessary to stimulate economic growth, would also diminish,” he warned.

The Reserve Bank of India (RBI) has already said that it will take monetary and fiscal steps to contain inflation - which it had hoped to contain below the five percent mark for the fiscal year ended March 31.

Analysts now expect the central bank to take some immediate steps to check inflationary pressures, like hiking the benchmark interest rate to control the supply of money in the financial system.

The International Monetary Fund (IMF) has forecast India’s inflation to moderate to 5.2 percent in the current calendar year and four percent in 2009, as against 6.4 percent in 2007.

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