Inflation rises to 7.55 percent, food prices surge

June 14th, 2012 - 2:37 pm ICT by IANS  

New Delhi, June 14 (IANS) India’s inflation moved up to 7.55 percent in May as compared to 7.23 percent in the previous month, mainly driven by a sharp increase in the price of food items, adding to the woes of policy makers as the economic growth remains under pressure, government data showed Thursday.

The monthly inflation based on wholesale price index (WPI) was 9.56 percent during the corresponding month of previous year.

Food inflation surged into double-digits. Food inflation rose to 10.74 percent in May as compared to 8.25 percent in the previous month as vegetables, pulses, milk, egg, meat and fish became costlier, pinching the pockets of common people.

Food inflation had re-entered the double-digit zone after a gap of six months in April, 2012 and the trend continues in May.

Prices of vegetables surged by 49.43 percent year-on-year. Potato price went up by 68.10. Milk became costlier by 11.90 percent. Prices of egg, meat and fish rose by 17.89 percent. Pulses became costlier by 16.61 percent.

Price of manufactured products increased by 5.02 percent year-on-year, while price of fuel and power grew by 11.53 percent. Petrol prices went up by 10.51 percent.

In May, the three state-owned oil marketing companies (OMCs) had hiked petrol prices by Rs.6.28 per litre excluding local taxes, the steepest such hike in recent times. The OMCs later retracted the hike by Rs.2 per litre due to falling global crude prices. However, petrol as an item has lower weightage in the WPI of about 1.09 bases points and does not primary impact the headline inflation.

Diesel on the other hand has a higher weightage in the WPI of about 50-75 basis points due to larger usage in the transportation sector. High speed diesel prices went up by 9.24 percent.

The recent data showed that India continued to face the problem of high inflationary pressure and low growth.

As per the data released by the Central Statistics Office last week, India’s industrial output grew marginally by 0.1 percent in April due to poor show of mining and manufacturing sectors.

The factory output, measured in terms of the Index of Industrial Production (IIP), had declined by 3.5 percent in industrial production in March, the first such contraction in factory output since October 2011, when it shrank by 4.7 percent.

The sharp fall in factory output is expected to put pressure on the apex bank to cut key interest rates. Reserve Bank of India (RBI) is scheduled to hold its mid-quarterly policy review next week.

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