New Delhi: The continuing rise in food article prices has seen inflation for the week ended 27 January, rise to a two-year high of 6.58 per cent, over taking the previous high of 6.12 per cent in the week ended 6 January.
This is a significant increase from the corresponding week last year, when inflation was at 4.04 per cent. Inflation has been rising despite fiscal measures taken by the finance ministry like bringing down customs tariffs in January and monetary measures, including increase in short-term overnight lending to banks by RBI
This has raised fears of further measures from Reserve bank of India to further squeeze money supply. On 31 January, the bank had raised its repo rate to a four-year high of 7.50 per cent to help rein in inflation and cool the strong demand for loans. In its last policy statement, though the central bank has maintained its inflation target range at 5 per cent to 5.5 per cent, there are many over-cautious references and statements in the policy statement.
The statement on 31 January also repeats the risks of overheating of the economy, though the RBI admits such risks could be transitional in nature. The bank had also warned of further hikes
Inflation, based on the wholesale price index (WPI), has been pushed on sequential basis by 0.47 per cent within a week from 6.11 per cent on January 20 this year mainly on account of rise in prices of food articles like vegetables (0.7 per cent), eggs, meat and fish (1.4 per cent), milk (1.4 per cent), fruits and oil seeds (1.7 per cent each).
However, prices of pulses, sugar, processed food products and other manufacturing products came down marginally during the week.
The index for primary articles, with 22.02 per cent weightage in the WPI increased by 0.6 per cent to 215 from 213.7 the previous week.
Meanwhile, the index for fuel, power, light and lubricants (14.23 per cent weight) and manufacturing products having 63.75 per cent weight in the wholesale price index remained unchanged.
As per the revised official figures released today, inflation stood at 5.36 per cent on 2 December, 2006, higher than the 5.16 per cent provisional figures.
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