Inflation rate up to a 42-week high of 3.74%

The inflation rate had been going up steadily since February 26, registering 1.60 per cent rise in a matter of four weeks. Last week, the inflation rate went up sharply by 0.76 per cent mainly on account of considerable rise in the prices of imported petroleum crude.

The recent jump was due to increase in the prices of fish, vegetables, castor seed, naphtha, bitumin, furnace oil, three-wheelers and scooters. But the prices of tea, barley, urad, copra, biscuits, bran and enamelled copper wires dropped during the week under review.

Many industrialists feared that the five per cent hike in freight charges would boost the industrial production cost which, in the long run, would give impetus to cost push inflation rate. Many financial pundits felt that freight hikes coupled with budget proposals would push up the inflation rate in the coming months when these proposals become effective from April 1.

To bring down the mounting oil pool deficit, the Government had no other choice but to hike the diesel prices last year. This hike was necessitated due to hefty international petroleum crude prices. The Government heaved a sigh of relief when the petroleum exporting countries decided to increase their crude production from April 1. This would help in reducing the prices of crude. The Government is likely to save $ 2.5 billion in its oil import bill for the coming year.

Upward swing in the indices of fuel, power, light and lubricants, chemicals and chemical products and transport equipment triggered a 0.1 per cent rise in the official wholesale price index for all commodities (base 1981-82) to 366.6 on March 18 from 366.2 in the previous week.

The final wholesale price index for all commodities (base 1981-82) stood at 365.4 on January 22 as against the provisional index of 365. The inflation rate based on final index worked out to 3.42 per cent in contrast to 3.31 per cent based on provisional index.

The inflation rate based on consumer price index for industrial workers, which is the real picture of retail prices, rose sharply by 0.99 per cent to 3.61 per cent in February compared to 2.62 per cent in the previous month. In January, it shot up drastically by 2.15 per cent from 0.47 per cent in December last year. The inflation rate had touched its lowest in November last year when it stood at zero per cent. It had been on the decline for the consecutive 11 months since January 1999.

With tea prices plummeting by 15 per cent, barley prices down by five per cent, urad prices by three per cent, ragi and masur by one per cent each, the index for food articles, under the primary articles group, fell 0.1 per cent to 454.8 from 455.1. But fish prices shot up by five per cent, vegetables by four per cent, bajra by three per cent, gram prices up by two per cent and arhar by one per cent.

The index for non-food articles dipped by 0.1 per cent to 373.7 from 374.1 because copra prices slumped by three per cent, groundnut and raw rubber prices by one per cent each. But castor seed prices rose by four per cent, mesta and sunflower by three per cent each, raw skins prices up by two per cent and soyabean by one per cent.

Due to 13 per cent hike in prices of naphtha, six per cent rise in prices of bitumin and furnace oil, two per cent increase in prices of light diesel oil and one per cent climb in electricity tariffs, the index for fuel, power, light and lubricants rose sharply by 1.2 per cent to 444.9 from 439.8.

As biscuits prices dropped by four per cent, bran prices down by two per cent and gur by one per cent, the index for food products, under the manufactured products group, declined marginally to 334 from 334.1. But edible oils and cattle feeds became dearer by one per cent each.

The index for textiles came down by 0.3 per cent to 327.9 from 328.9 because woollen yarn, hessian and sacking bags became cheaper by three per cent each and hessian cloth prices fell by one per cent.

The index for chemicals and chemical products rose by 0.5 per cent to 293.3 from 291.9 because fertilisers and castor oil became dearer by two per cent each.

Due to a marginal increase in the prices of cement, the index for non-metallic mineral products rose by 0.1 per cent to 372.1 from 371.9.

With enamelled copper wires becoming cheaper by four per cent, power-driven pumps and electric motors prices declining by one per cent each, the index for machinery and machine tools fell marginally to 310.8 from 310.9. But rubber insulated and other cables became costlier by two per cent and tractors prices up by one per cent.

The index for transport equipment and parts rose by 0.2 per cent to 301.3 from 300.8 because three-wheelers became dearer by four per cent and scooters prices up by three per cent.

The indices that remained unchanged at their previous week’s level were minerals, beverages, tobacco and tobacco products, wood and wood products, paper and paper products, leather and leather products, rubber and plastic products, basic metals, alloys and metal products and other miscellaneous manufacturing industries.