No more steps to curb 14-year high inflation of 11.42 percent (Lead)

June 27th, 2008 - 7:04 pm ICT by IANS  

A file-photo of P. Chidambaram

New Delhi, June 27 (IANS) Squeezing the household budgets even further, India’s annual rate of inflation shot up to a 14-year high of 11.42 percent for the week ended June 14, against 11.05 percent for the week before. The alarming data was released Friday against the backdrop of global crude oil prices topping the $140 a barrel mark and several Indian banks revising their interest rates upward to make loans for areas like housing and consumer goods costlier.

The government said that no more “action” would be initiated even if prices stabilised, notwithstanding the headline inflation maintaining two-digit.

“Even if prices stabilise, there is no scope for action,” said Shubhashis Gangopadhyay, advisor to Finance Minister P. Chidambaram.

He said the double-digit inflation would stay for some time, while asking the people not to keep harping on the high inflation rate.

“The government is constantly watching the situation,” he told reporters after the official wholesale index data was released. “Do not harp on the double-digit inflation. Do not expect government action simply because inflation is in double-digit.”

India’s central bank - the Reserve Bank of India - had June 24 hiked the repo rate or rate at which it lends money to the banks by 50 basis points from 8 percent to 8.5 percent, and the cash reserve ratio or CRR was increased to 8.75 percent from 8.25 percent.

The statistics on wholesale price index (WPI) released by the commerce ministry showed that the inflation rate rose during the week due to higher prices of primary articles, up by 0.2 percent, even as the non-food index fell 0.5 percent.

Alarmingly, the final data for the week ended April 19 suggested that the annual inflation was 8.23 percent against 7.57 percent reported earlier based on provisional data.

Prices of fuels also rose 0.1 percent due to higher prices of lubricants (19 percent), while that of rice and bran oil rose by 6 percent each.

The WPI for the week ended June 7 had seen a 7.8 percent increase in the prices of fuel, power, light, and lubricants, taking inflation to a 13-year high at 11.05 percent.

Among the manufactured products, the WPI for leather and leather products rose by 1.1 percent, while that of chemicals and chemical products by 1.4 percent.

Tags: , , , , , , , , , , , , , , , , , , ,

Posted in Business |