Inflation rises to 3.42%

High prices of manufactured items and food articles like vegetables and barley have pushed up inflation to 3.42 per cent during the week ended September 22, as against 3.23 per cent in the previous week. The wholesale prices-based inflation has been on a downhill trend for the past few weeks and this is the first time in five weeks that it has moved upward. During the week under review, rise in inflation was mainly on account of the 0.5 per cent increase in prices of manufactured items, which account for slightly less than two-thirds of the total weightage. Inflation, however, is well within RBI’s target of close to 5 per cent for this fiscal. The price index was at 5.43 per cent in the corresponding week a year ago.

During the week ended September 22, the food article group declined by 0.1 per cent due to lower prices of urad, gram and condiments and spices by one per cent each. Among manufactured commodities, prices of cement went up by 0.1 per cent, oil cakes by 6 per cent, while those of rice bran oil, salt and imported edible oil increased by one per cent each. Acid of all kinds became expensive by 12 per cent, blooms and billets slabs by 10 per cent, lead ingots by five per cent, ferro silicon by three per cent and zinc ingots by two per cent.

Despite this rise, however, inflation still remains well within RBI’s target of close to 5 per cent for this fiscal. The price index was at 5.43 per cent in the corresponding week a year ago.

However, the fear of a possible hike in cash reserve ratio by the RBI affecting inflation looms large. The central bank is scheduled to announce its mid-term review of the monetary policy on October 30.