Inflation at 12.01% as edibles cost more

As per the data released on Thursday, prices of most of food articles went up, although some items like fruits showed downward trend, whose prices declined by 0.5 per cent, said official figures released on Thursday.

In its statement, the Ministry said out of a total 98 primary articles, prices of 18 have declined as compared to the previous week.

Finance Minister P Chidambaram had said at a meeting of Congress spokespersons that government was open to bringing more commodities under the futures trading ban. Eight farm commodities, including rice and wheat, are already banned for the purpose of forward trading.

Meanwhile, prices of iron and steel remained unchanged but cement prices marginally increased.

For the corresponding week, inflation stood at 4.70 per cent a year ago.

Commenting on the rate of price rise, the country’s Chief Statistician Pronab Sen said that inflation was not accelerating prices had plateaued. “This is a news for comfort.”

He said that restructuring of WPI will not change the bigger picture. The Commerce Ministry will have to take a call on it.

However, analysts believe that there are still price pressures and inflation could rise further.

Crisil Principal Economist D K Joshi said, “There is pressure from food side and inflation could move to 13 per cent before reversing the trend.”

However, the good news is the crude oil price melt down, which can bring down prices of industrial fuels to an extent.

In a bid to tame inflation, RBI in July increased the short-term lending (repo) rate by 50 basis points to 9 per cent and also raised the mandatory deposits (CRR) that banks have to park with it by 25 basis points.

However, the exact effect of these measures will be known only after some time as official data is released with a two weeks lag and hike in CRR would come into effect only on August 30.

Among the primary article, prices of raw tobacco increased by five per cent, raw cotton by two per cent.

At the same time prices of minerals like gypsum increased by 48 per cent, phosphorite by 27 per cent, fluorite by 21 per cent and silica sand by 9 per cent. During the week furnace oil was expensive by 3 per cent. In the manufactured item group, cement went up marginally while groundnut oil by 2 per cent, man made clothes by 5 per cent, batteries by 7 per cent, printing paper by 1 per cent.

As per the revised data, inflation rate for the week ended May 31 has been updated to 9.32 per cent, against 8.75 per cent reported earlier.