Inflation in double digits

The double digit inflation in May was partly attributed to low base of 1.38 per cent a year ago. However,inflation is clearly spreading to manufactured items. Food inflation remained at enhanced level of 16.49 per cent despite moderation from 16.87 per cent in the previous month.

Among manufactured items,wood products prices rose by 8.8 per cent due to higher rates of plywood commercial planks.

Metal prices on an average rose by 3.4 per cent. Within this category,prices of stainless steel rose by 26 per cent,and that of steel sheets,plates and strips by 14 per cent.

Among primary raw food items,tea turned costlier by 21 per cent,urad by 5 per cent and moong by 3 per cent.

The double digit inflation may put RBI in a tight position as it would like to tighten money supply to tame rising prices,but liquidity in the system is too tight due to payments towards spectrum for 3G mobile services and broadband wireless access.