Inflation soars to 8.17

The respite was short lived. After a marginal fall to 7.94 cent, inflation again shot up to new four year high of 8.17 per cent for the week...

The respite was short lived. After a marginal fall to 7.94 cent, inflation again shot up to new four year high of 8.17 per cent for the week which ended on August 21. The main reason for the drastic rise in the inflation rate was the high prices of fuel, vegetables and edible oil.

Further, few now expect inflation to fall drastically in the coming weeks since the full effect of duty cuts in petrol, diesel, kerosene and LPG may be to some extent offset by the truckers8217; strike, which was called off last Friday.

Chief economic advisor Ashok Lahiri refused to comment on the new rise in the inflation rate stating that the Prime Minister Manmohan Singh may address it on Saturday at his press conference.

During the week under review, all the major commodity groups 8212; primary articles, fuels and manufactured products 8212; became costlier. In the global market, oil price was volatile since it initially fell as fears of disruptions in supplies from Venezuela eased and later started climbing up after shiite Muslim militia threatened to torch Iraqi oil fields.

In fact, though the government had ruled out yet another price hike in petroleum goods, diesel prices shot up by 1 per cent during the week under review. Further, the increased demand from manufacturing sector, which has picked up from the first quarter, also had a role in the surge in inflation.

nbsp;	Inflation woes

		nbsp;	8226; Few expect inflation to fall drastically in the coming weeks since the full effect of duty cuts in petrol, diesel, kerosene and LPG may be to some extent offset by the truckers8217; strike 8226; The government now is in the process of working out a fresh index, called the producer price index PPI, to get a more realistic picture of the inflation 8226; A committee under the Planning Commission is working on the new index which would have a base year of 2000-01 and the World Bank8217;s expertise is being sought for drawing up the methodology	nbsp;

The index of primary articles8217; group was up by 0.2 per cent to 192.7 points. Food articles8217; group index rose by 0.2 per cent to 189 points. A 9 per cent dip in raw rubber price pushed down the index for non-food articles8217; group marginally by 0.1 per cent to 195.1 points. Fuel, power, light and lubricants8217; group index rose by 0.3 per cent.

The index of heavy-weighted manufactured products8217; group was up by 0.2 per cent to 166 points.

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However, the government now is in the process of working out a fresh index, called the producer price index PPI, to get a more realistic picture of the inflation.

A committee under the Planning Commission member Professor Abhijit Sen is working on the new index which would have a base year of 2000-01 and the World Bank8217;s expertise is being sought for drawing up the methodology which is being used by most of the advanced nations.