Prices up in India but inflation rate slightly down

April 17th, 2008 - 3:05 pm ICT by admin  

A file-photo of P. Chidambaram

New Delhi, April 17 (IANS) Despite a general increase in prices, India’s annual rate of inflation came down slightly to 7.14 percent for the week ended April 5 against 7.41 percent for the week before, official data released Thursday said. The wholesale price index for all commodities for the week ended April 5 showed a rise of 0.3 percent at 226.6 from 226.0 for the previous week. But the rate of inflation came down due to a higher rise in the index during the comparable week of last year.

Significantly, the final data for the Feb 9, also released Thursday, showed that the actual inflation rate was sharply higher at 4.98 percent, compared to 4.35 percent as reported earlier, based on provisional statistics.

The official data also showed that in one week alone, prices of tea were up four percent, fruits and vegetables were dearer by two percent, while milk, gram and pork became costlier by one percent each.

Similarly, prices of ferro-silicon rose as much as 23 percent, basic pig iron and foundry pig iron was higher by nine percent each, while steel sheets moved up by six percent.

But prices of some commodities also declined like in the case of condiments and spices, down three percent, maize, down one percent, gur, down three percent and rape, mustard and groundnut oil, down two percent each.

The latest inflation data came against the backdrop of both Finance Minister P. Chidambaram and Agriculture Minister Sharad Pawar promising more steps Wednesday to rein in prices, amid sharp criticism from the opposition.

“State governments must reinforce the stock limit norms, and prosecute hoarders and black marketers. The central government will not hesitate from taking tough measures,” Chidamabaram told the lower house during a debate.

He also warned that manufacturers of some commodities like cement and steel were acting in consort like a cartel and issued a strict warning against their unfair trade practices.

The inflation rate is also more than two percentage points above the threshold level set by the Reserve Bank of India (RBI), which has already indicated some tough measures in its annual monetary policy statement April 29.

“Definitely, the level of inflation is unacceptable to us. It is higher than our tolerance limit,” said RBI Governor Y.V. Reddy at the World Leaders Forum in New York Wednesday. “We expect to make an announcement on 29 April.”

Politically, too, the United Progressive Alliance (UPA) government is facing rough weather on account of prices with not just the opposition but also the Left parties, which prop the ruling coalition, attacking its policies.

“The Manmohan Singh government must justify its existence. It seems there is no government in place. Things have been left to market forces. The government is out of place,” said Communist Party of India (CPI) leader Gurudas Dasgupta.

In this backdrop, the prime minister has warned that steep rise in food prices was not only make inflation management difficult but threatening to derail the macroeconomic stability and hurting the reform process.

According to Chidambaram, Manmohan Singh may also soon call a meeting of chief ministers of all states on how the problem of price rise could be collectively tackled.

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

Posted in Business |