India’s inflation rate accelerated to 7.33 per cent, sustaining pressure on the government and the Reserve Bank of India (RBI) to announce more measures to tame prices of essential commodities that have increased sharply in recent months.
The inflation rate based on wholesale prices rose from 7.14 per cent in the previous week largely on account of higher prices of food products and key raw materials, especially iron ore and other minerals.
The latest data for the week ended April 12 came shortly after a delegation of Left parties met Prime Minister Manmohan Singh seeking greater government intervention in price management. Singh said despite an extremely difficult global situation, with global food, commodity and oil prices rising, the government had been able to ensure that the Indian people were among the least affected in the developing world.
Finance Minister P Chidambaram told Parliament prices would moderate over time as fiscal and monetary measures started to kick in. “Though the measures to contain inflation may result in some moderation in economic growth, it is the endeavor of the government to sustain the current momentum of high growth with price stability” Chidambaram told the Lok Sabha in a written reply. “I am confident inflation will moderate over time,” the finance minister said.
The inflation rate has been climbing steadily since last October, driven largely by the sharp increase in prices of key commodities, including edible oil, oilseed, iron ore and steel. It has remained over the worrisome 7 per cent mark for the fourth consecutive week. It had climbed to a 40-month high of 7.41 per cent for the week ended March 9, dipped to 7.14 in the next week, but resumed its climb in the latest reported week. Inflation for the corresponding period last year was at 6.34 per cent.
This month the government slashed import duties on sunflower oil, palm oil, vanaspati and olive oil and banned exports of non-basmati rice and cement in an attempt to bring prices under control. Jayati Ghosh, professor of economics at the Delhi-based Jawaharlal Nehru University, felt a fall in prices would primarily depend on how the government handled the food economy.