Much to chagrin of the UPA government, inflation rate almost doubled during the three months of 2008 to reach the 39-month high mark of 7 per cent.
Although 2008 began with inflation rate of 3.79 per cent for week ended on January 5, prices rose as the year progressed.
The wholesale price based inflation crossed 4 per cent by end of January and 5 per cent in February. As per the latest data, the price line rose 7 per cent in the week ended March 22.
The annual rate of inflation since January, according to official data, has gone up by 3.21 per cent with highest increase of 1.98 being recorded during the four weeks ended on March 22.
Such a sudden spurt in prices has thrown household budget of the common man into disarray, putting pressure on the government and the Reserve Bank to take steps to control the inflationary pressure.
Although the government has already taken a host of fiscal measures like scrapping import duty on crude edible oils and banning export of non-basmati rice and pulses to check spiralling prices, the impact would be felt only by the end of the month.
Sending a strong signal to hoarders, Commerce and Industry Minister Kamal Nath had warned "We will not hesitate to take the strictest measures, including using legal provisions against hoarding and profiteering whether in food, cement or steel."
Rising prices have already taken a political colour, with senior BJP leader and former Finance Minister Yashwant Sinha accusing the government of "complete failure" in checking the price rise.
Sinha said the government had "all the time in the world, not only to anticipate this problem, but also to take steps to tackle it, but when you are not able to take care of it despite the forewarning, that is where you fail completely."
However, Minister of State for Finance P K Bansal last week had said "the government is conscious of it (high inflation), the measures would be taken wherever situation warrants."
Manila-based Asian Development Bank had said "inflation is the biggest worry for India at the moment. In next 1-2 months inflationary pressure will remain, it will come down as US slows down further, at least for some of the commodities like fuels, metals."
ADB had said the government's ability to control prices is limited since India is not alone in the region where inflation is rising and global commodity prices are also on the upswing.
Pointing out that global circumstances are fuelling inflation, ICICI Bank managing director K V Kamath said "I am sure policy makers both at the monetary level and in the ministry will work together to ease supply side constraints."
RBI might increase Cash Reserve Ratio to absorb excess liquidity instead of raising interest rate, felt Crisil Principal Economist DK Joshi.