Inflation shifts gears,rises to 5.6 pchttps://indianexpress.com/article/news-archive/web/inflation-shifts-gears-rises-to-5-6-pc/

Inflation shifts gears,rises to 5.6 pc

The finance ministry attributes the rise to the oil and transport sector strikes

As expected,the truckers’ strike earlier this month pushed up food prices significantly resulting in higher inflation for the week ending January 10. Inflation rose to 5.6 per cent,up from 5.24 per cent in the previous week. The increase in the inflation rate has temporarily reversed the 11-week declining trend which had set in since the last week of October 2008.

However,compared with the high of 12.9 per cent in early August last year,this particular jump in inflation is hardly of any consequence. “It’s just a temporary glitch,and inflation will continue to fall in the days to come,” DK Joshi,principal economist,CRISIL told The Indian Express.

With inflation already at 5 per cent,economists believe as the base effect of last year’s high inflation rate kicks in,inflation will soon fall drastically to touch zero by March and will also likely turn negative for a brief period later this year. Speaking to The Indian Express,Pronab Sen,chief statistician of India,said,“Inflation will probably touch zero by March and may turn negative for a short while corresponding to the period last year when inflation saw a sharp jump.”

However,Sen added,with the higher minimum selling price of several agricultural products and the continued feed-on effect of last year’s high commodity prices on the prices of manufactured goods,inflation wouldn’t stay in the negative zone for too long. “The basic change in inflation would depend on the behaviour of commodity prices this year,” he said.

The department of economic affairs in the finance ministry issued a statement today after the release of the inflation data attributing the rise to the oil and transport sector strikes. Oil prices,however,remained unaffected despite the oil PSU employees’ strike with the rate of inflation in this segment at (-)1.3 per cent. The overall wholesale price index stood at 230 compared with 229 in the previous week.

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According to the finance ministry,the contribution of primary articles to the year-on-year inflation rate accounted for 46.9 per cent,as against their share of 22 per cent in the WPI basket. While the contribution of the fuel and power group was (-)5.1 per cent vis-à-vis share of 14 per cent,that of manufactured products was 58.5 per cent against a share of 64 per cent in the commodity basket.