Govt will take steps to contain rising prices: FM
By PTI |
Highlights
NEW DELHI: Finance Minister P Chidambaram on Friday said headline inflation, which crossed 6 per cent today, was "indeed a matter of concern" and the government would take steps required to contain rising prices.
"Ultimately inflation is a monetary phenomenon and is influenced by supply side. Hence, the Ministry of Finance is in touch with both RBI and Ministry of Agriculture and Consumer Affairs. We will watch the situation carefully and take whatever steps required to be taken," he said.
The govenrment has found that items of daily use of the common man such as urad, tea, tomatos, coconut and arhar are causing concern, he said while reading out a statement on the sidelines of CII function.
The government also noted a rise in few manufactured items like steel products and edible oil.
Chidambaram said rise in WPI-based inflation to 6.12 per cent during the week ended January six was largely due to the "base effect".
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The price index for all commodities for the week under consideration moved only from 208.1 points to 208.2, a movement of 0.1 point. However, in the corresponding week of the previous year the index declined by 0.9 points, he said."Hence, the base effect has triggered this rather sudden rise in WPI rate," Chidambaram said.
While the index for primary articles as well as that for fuel, power and lubricants have moved up slightly, index for manufactured products has declined slightly during the week, he said.
Beginning September 2006, index numbers of these three groups have remained range bound to the considerable decline in fuel, power and lubricants and small rise in manufactured products.
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Meanwhile, industry body Assocham president V N Dhoot said in a statement that inflation was expected to rise further over the next two-three months.The chamber suggested RBI should take corrective steps in both repo and reverse rates in the forthcoming monetary policy review on January 31, he said.
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Inflation surged to this fiscal's highest level of 6.12 per cent for the week ended January six due to some expensive food products and fuel items, increasing pressure on interest rates ahead of RBI's credit policy review slated for January 31.Wholesale prices-based inflation crossed six per cent for the first time this fiscal. It jumped by 0.54 per cent against 5.58 per cent in the previous week. Inflation was just 3.86 per cent during the week ended January seven, 2006.
Prices of fruits, vegetables, maize, arhar, wheat, groundnut seed, cotton seed, rapeseed, mustard seed, aviation turbine fuel, naphtha and furnace oil, moved up.
However, moong, condiments and spices, fish-marine, bajra, gram, jowar, urad, raw cotton, raw jute, sugar, gur, coconut oil and imported edible oil became cheaper.
Before this week, inflation was highest at 5.58 per cent in the previous week ending December 30, 2006 as per the provisional estimate and 5.61 per cent during the week ended October 21, 2006 as per revised estimates.
Inflation is far above the threshold of 5.5 per cent of RBI's projection for this fiscal. This is likely to put pressure on RBI to take anti-inflationary measures in its January 31 credit policy review, which would directly or indirectly jack up interest rates.
Bankers have been saying short-term interest rates are under pressure after RBI hiked CRR in two phases of 0.25 per cent each, absorbing Rs 13,500 crore from the system.
The wholesale price index (base 1993-94), on which the inflation data is based, rose 0.05 per cent to 208.2 points during the week ended January 6, from 208.1 in previous week.
Among food articles, fruits and vegetables, maize, arhar and wheat became dearer by one per cent each. However, prices of moong, condiments and spices declined by two per cent each, while prices of fish-marine, urad, barley, bajra, gram and jowar decreased one per cent each.
In non-food category, prices of groundnut seed and raw rubber moved up by three per cent and two per cent respectively, while cotton seed, rape & mustard seed prices increased one per each.
However, prices of niger seed, raw jute, copra and raw cotton fell by three per cent, two per cent, one per cent and one per cent respectively.
In the fuel, power, lights and lubricants group, aviation turbine fuel prices rose by five per cent, while prices of furnace oil and naptha were up two and one per cent, though bitumen prices witnessed a decline of two per cent.
The government has also revised inflation higher to 5.39 per cent for the week ended November 11 from the provisional estimate of 5.29 per cent. This follows revision in wholesale price index to 209.1 points against 208.9 points, estimated earlier.
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