Inflation rises to 4.22 pc

The jump in the inflation rate was on account of sharp rise in the prices of kerosene, LPG, cotton seed oil, salt, rapeseed, mustard seed and newsprint. But barley, eggs, raw rubber, malted food and bran became cheaper considerably.

Many economists fear that the freight rates hike coupled with budgetary proposals which came into effect from April 1 may increase the industrial production cost which in turn would push up the inflation rate in coming months.

To reduce the existing burden of oil pool deficit, the government increased the diesel prices. The rise was necessitated due to spiralling prices of international petroleum crude prices. To add to the woes of people, the Government had hiked the prices of petrol and diesel by 13 and 52 paise on April 2.

The Government got some relief when the petroleum exporting countries decided to increase their production which would help in bringing down the oil prices considerably. The Government8217;s oil bill will be reduced by about 2.5 billion.

ICICI Securities expect inflation rate to remain below four per cent for next few months due to the expected softening of global oil prices which would lessen the strain on oil pool account. This would reduce the administered prices in the country. Last week, the Government introduced new series having 1993-94 as the base year on the recommendations of the working group under the chairmanship of Prof S R Hashim. The new series has included items having large transactions in the economy. The coverage of new series has been rationalised by incorporating important new items, dropping unimportant items and amalgamating items with those to which they are akin. About 136 distinctly new items have added to the basket while 150 items have dropped from the old series.

Due to substantial rise in the indices of fuel, power, light and lubricants, paper and paper products, the official wholesale price index for all commodities base 1993-94 rose by 0.5 per cent to 148.9 on April 8 from 148.2 in the previous week. The WPI had been on the rise for the second consecutive week.

The final wholesale price index for all commodities base 193-94 stood at 145.9 on February 12 as against the provisional index of 145.8. The inflation rate calculated on final index worked out to 3.04 per cent in contrast to 2.97 per cent based on provisional index.

However, the inflation rate based on consumer price index for industrial workers which gives the real picture of retail prices shot up by 0.99 per cent to 3.61 per cent in February compared to 2.62 per cent in the previous month. It had touched its nadir in November last year when it stood at zero per cent.

The food articles, under the primary articles8217; group, rose by 0.1 per cent to 172.6 from 172.5 because jowar and gram prices went up by two per cent each, fruits, vegetables, condiments and spices prices rose by one per cent each. But barley and eggs prices fell sharply by five per cent each, urad, poultry chicken and tea dipped by one per cent each.

Due to lower prices of rape seed and mustard seed by two per cent, copra and fodder prices down by one per cent each, the index for non-food articles declined by 0.1 per cent to 140.1 from 140.43. But the prices of raw rubber shot up by three per cent and raw silk, gingelly seed and raw skins rose by two per cent each. Hefty 41 per cent jump in the prices of kerosene and 10 per cent hike in prices of liquefied petroleum gas made the index for fuel, power, light and lubricants go up by 2.5 per cent to 173.6 from 169.3.

With cotton seed oil prices plummeting by seven per cent, salt and rape seed oil, mustard seed oil prices down by five per cent each, gingelly seed and cattle feed prices up two per cent each, ghee and coconut oil down by one per cent each, the index for food products, under the manufactured products group, declined by 0.1 per cent to 150.4 from 150.6. But the prices of malted food rose by by nine per cent, bran prices up by four per cent, maida, suji, atta and gur prices up by two per cent each and groundnut oil prices went up by one per cent.

A slender one per cent hike in prices of hessian cloth made the index for textiles go up by 0.1 per cent to 117.3 from 117.2.

Due to hefty six per cent increase in prices of newsprint in the index for paper and paper products rose by 0.7 per cent to 151.4 from 150.3.

Due to one per cent rise in prices of caustic soda, drugs and medicines, the index for chemicals and chemical products rose by 0.3 per cent to 160.4 from 160. But the liquid nitrogen prices declined by one per cent.

Due to one per cent fall in prices of cement, the index for non-metallic mineral products declined by 0.6 per cent to 125.7 from 126.4.

With tractor becoming dearer by one per cent, the index for machinery and machine tools rose by 0.1 per cent to 115.6 from 115.5. Similarly, the index for transport equipment and parts rose by 0.1 per cent to 138.5 from 138.4 because scooters became costlier by one per cent.

The indices that remained static at their last week8217;s level were minerals, beverages, tobacco and tobacco products, wood and wood products, basic metals, alloys and metals products.