labels: economy - general
Inflation becomes a political issuenews
23 February 2007

As indicated by Prime minister Dr Manmohan Singh's letter to state governments advising them to monitor prices and take prompt steps to check them, the current price has become a political challenge for the government, with the poll schedule for the crucial Uttar Pradesh elections due in April. CNBC-TV18 reports.

The prime minister's letter to state governments advising prompt action on inflation would be the expected thing to do with prices snapping at the 7-per cent mark. It has acquired new urgency with Uttar Pradesh elections due in April 2007.

Inflation data will be announced on Friday and analysts polled by Newswire 18 expect the rate for 11 February week to be 6.68 per cent, slightly lower than 6.73 per cent for the previous week, and that too because of the higher base effect in the year ago period. But the finance minister is hopeful.

"As sugar, potatoes, vegetables eased, we see that as supplies improve, prices will also improve," says Chidambaram.

Whether last week's fuel price cut has had an impact would be seen when inflation data for that week is released next week.

Though the government is quite edgy and is prepared to resort to multiple measures, the situation is not entirely in its control.

" (The) Present spurt is on account of demand supply mismatches and international high prices of food, metals and mineral prices. We will not hesitate to take more steps," he adds.

The finance minister went back into time to say that both this and the previous govenment had ultimately come to grips with persistent high prices. So apart from fiscal and monetary measures, the govenment will also have to rely on temporal ones. Time is a good healer.


 search domain-b
  go
 
Inflation becomes a political issue