Inflation rate gallops to 45-month high of 8.1%

Government measures appear to have little control on the wholesale prices, which raced to a 45-month high of 8.1 per cent for the week ending May 17 from 7.82 in the previous week. The price level was whipped up by costlier edibles and industrial fuel The last high, as per provisional figures, was 8.33 per cent in the week ended August 28, 2004. The surge in inflation, which is hovering above the RBI’s tolerance level of 5.5 per cent, may prompt the RBI to further tighten the money supply through an interest rate hike.

Since the March 31 decision of the Cabinet Committee on Prices (CCP) to slash the import duty on edibles oils and ban export of non-basmati rice, the government has unveiled numerous measures to tame the price rise. It has also goaded steel and cement manufacturers to cut and hold prices for up to three months. Incidentally, cement and steel prices came down by 0.6 per cent each during the week under review. As opposed to the prices of these construction materials, prices of fish marine jumped by 6 per cent, fruits and vegetables 3 per cent, moong 2 per cent and spices by 1 per cent.

Despite a ban on export of skimmed milk powder, it became costlier by 7 per cent. Also, prices of imported edible oil and khandsari went up by 1 per cent. Among industrial fuels, furnace oil was dearer by 3 per cent, light diesel oil 2 per cent and coke 31 per cent. Among food prices, eggs, meat and fish went up by 1.3 per cent, gram by 1 per cent, mustard seed by 1 per cent, raw rubber by 2 per cent during the week under the review. On the back of bumper foodgrains production, prices of wheat and maize declined by 1 per cent. Tea also got cheaper by 3 per cent. Besides, some mineral like barytes fell by 15 per cent.