Inflation rate to average at 5 percent this fiscal: Industry

July 1st, 2009 - 8:30 pm ICT by IANS  

New Delhi, July 1 (IANS) Rising commodity prices globally, delayed monsoon and fiscal and monetary measures are likely to push up India’s annual rate of inflation and average near 5 percent this fiscal, according to an industry lobby.
“The surge in international commodity markets led by energy, metals and food is likely to push domestic prices up,” the Associated Chambers of Commerce and Industry of India (Assocham) said, and cautioned that if the monsoon fails or remains below the average, the consequences could be far-reaching.

“With no new crop arrivals expected until September-end and a prolonged delay of monsoon arrival, the supply of agricultural commodities would taper off leading to food prices shooting up,” Assocham said.

“Despite the wholesale price index (WPI)-based inflation turning negative, the overall food article inflation is still holding strong at more than 8 percent,” the chamber observed.

“A rebound in commodity prices aggravated by poor monsoon would lead WPI inflation to average near 5 percent this fiscal” said Assocham secretary general D.S. Rawat.

Among the major commodities, international crude oil prices have jumped nearly 30 percent over the past month to a seven-month high.

Stimulus packages and measures to ease money supply would commensurate into a fresh lease of demand that would give a push to the general price level in the economy, added the study.

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