Inflation a matter of concern, admits governmentAugust 22nd, 2008 - 10:21 pm ICT by IANS
New Delhi, Aug 22 (IANS) The government Friday said that soaring inflation, which zoomed to a 16-year high to 12.63 percent for the week ended Aug 9, was “a matter of concern”.”The headline inflation measured by WPI (wholesale price index) continues to be a matter of concern. It has touched 12.63 percent for the week ending Aug 9, 2008,” the finance ministry said in a statement Friday.
“While the WPI continues to be a matter of concern, efforts are being made to address the problem through monetary steps as well as improving the supply side.”
The ministry has said that monetary measures taken by the government are “intended to address the issues of money supply and liquidity. Hence, they will help in moderating aggregate demand.”
The ministry said the other part of the problem was the supply side, and that the “supply side measures will work in the medium to long-term.”
The finance ministry has said the government has approved open market sales of up to 6 million tonnes of wheat, and would release an additional quantity of 500,000 tonnes of non-levy sugar during August-September this year.
“The government is examining a scheme for supply of 400,000 tonnes of pulses with a subsidy of Rs.10 per kilogram,” said the statement.
“Prices of fruits, vegetables, milk, tea etc are largely governed by localised supply-demand factors and any other local disruptions like rain etc.”
“It is the movement of prices in these items which has impacted the primary articles group. In the week ending Aug 9, the prices of 17 articles declined on a week-on-week basis and the prices of 56 articles showed no change.”
The finance ministry headed by P. Chidambaram in its statement said: “Without underplaying the seriousness of the concern, the government wishes to place the matter in perspective.”
“There are three groups which constitute the 435 items that are taken into account for reckoning the WPI–primary articles, fuel and power, and manufactured products,” the ministry statement said.
“In the manufactured products group, the index increased from 206 in the previous week to 206.4 in the week ending Aug 9. This is reflected in the annual point-to-point inflation of this group, which increased from 10.75 per cent to 10.91 per cent.
“The point to be stressed is that the WPI as well as the inflation rate for each group is measured on an annual point-to-point basis. Hence, it is largely influenced by the trend in the corresponding week of the previous year, which is the base year.”
The Prime Minister’s Economic Advisory Council (EAC), in its “Economic Outlook Report 2008-09″, has predicted a 7.7 percent economic growth in the current fiscal, as compared to 9.1 percent last fiscal.
Former Reserve Bank of India (RBI) governor C. Rangarajan, while releasing the EAC’s economic outlook report here Aug 13, said inflation would moderate to 8-9 percent by March 2009.