Inflation zooms to a high of 11.42%

Pushed by higher prices of food articles including milk, cereals, tea, edible oils and some manufactured items like soaps and detergents, inflation soared to 11.42 per cent for the week ending June 14.

The inflation number was higher by 0.37 per cent over the figure recorded during the previous week. Inflation was 4.13 in the corresponding week a year ago.

At 11.42 per cent, it has breached a high of 11.11 per cent witnessed on May 6, 1995, but was still below 16.9 per cent recorded in March that year.

During the week, the prices of tea went up by three per cent, milk by one per cent, sunflower oil by four per cent, vanaspati by two per cent and imported edible oil, salt mustard oil by one per cent each.

At the same time, items of daily use like soap became expensive by eight per cent, detergents by nine per cent, hair oil by one per cent.

Besides, fuel items especially lubricants became dearer by 19 per cent, while prices of steel products like wire ropes and steel wire shot up by 36 and 25 per cent respectively.

Galloping inflation may further prompt government and Reserve Bank to take steps to tame price rise. According to Finance Minister P Chidambaram, "It (inflation) will remain in double digits for some more weeks."

The government and RBI have already taken measures to control inflation, he said, adding that "if necessary we will not hesitate to take more fiscal and monetary measures."

In a bid to contain inflation, RBI earlier in the week increased the short term lending rate to banks and the mandatory deposits which banks are required to park with the central bank by 0.5 per cent each.

If inflation continues to remain high, RBI may take further monetary measures to tame inflation, Crisil Principle Economist D K Joshi told PTI.

However, Finance Minister's Adviser Subhashish Gangopadhyay told reporters in New Delhi that inflation would remain in double digit for some more weeks even if prices fall due to base effect, and that the government should not be expected to take steps just because inflation is in double digit.

Exuding confidence in anti-inflationary steps, Commerce and Industry Minister Kamal Nath had said yesterday, "It is going to go up by another 0.2 or 0.3 per cent. But we are hoping that in the next two months, we will have some effects of the measures we have taken."

"I think we are peaking out on inflation. The figures are going to peak now. We will soon be starting a decline," he had said.

Much to the respite of the aam aadmi, prices of fruits and vegetable and masur declined by one per cent each during the week. At the same time, prices of groundnut seed dipped by one per cent, linseed three per cent and cotton two per cent.

In the manufactured goods category, prices of safety matches decreased by two per cent, toothpaste and gur by one per cent each. Among mineral group, prices of metallic minerals were up by four per cent.

The items which contributed to high inflation also included texturised yarn whose prices shot up by 16 per cent, benzene 22 per cent, pvc resins by 17 per cent, thinners by 16 per cent, enamels by 10 per cent and electric motors by 12 per cent.

As per the revised WPI data, the inflation rate for the week ended April 19 was 8.23 per cent as against the provisional figure of 7.57 per cent.

Inflation: The silent killer!