Inflation surges to 7.5%, Govt says will dip soon

Last year this period, inflation stood at 4.27 per cent. The Wholesale Price Index has risen by nearly one per cent to 186.2 points.

But the Finance Ministry downplayed any fears. Chief Economic Adviser to the Finance Minister Ashok Lahiri said: ‘‘The delayed monsoons and the impact of higher international commodities’ prices have pushed inflation during this period but the trend should decline by middle of August.’’ And added that an ‘‘appropriate mix of policies’’ would bring the levels down. He didn’t specify what these policies would be.

According to a press release by the Finance Ministry, one reason behind the surge the statistical ‘‘carryover effect.’’ What this means is that the NDA government virtually kept the WPI fixed at the level of 174 points and thereabouts between May 3 to August 21, 2003. So from mid-August, the higher comparable figure would put downward pressure on this year’s inflation, he added.

Pushing the WPI are:

• Primary articles’ group index shot up by three per cent to 191 points owing to a steep rise in the prices of food items and non-food articles.

• Mineral prices more than doubled—a 189 per cent rise in the price of iron ore led to a 107.1 per cent rise in the index of minerals to 304.2 points.

• Food articles’ prices rose by over one per cent to 185.9 points due to costlier vegetables (five per cent), fruits, jowar and condiments and spices (three per cent each), bajra, barley and urad (two per cent each) and milk, ragi, masur, gram, rice, maize and moong (one per cent each). The only food item which registered a drop in prices was a one per cent decline in the price of eggs.

• Fuel, power, light and lubricants group index remained unchanged at the previous week’s level of 274.4 points despite the hike in the prices of petroleum products in recent weeks compared to last year’s level of 249.4 points.

• The index for manufactured products’ group shot up by 0.3 per cent to 164.9 points due to rise in prices of food items, textiles, paper, leather, chemicals, non-metallic minerals and transport equipment.