Finance Minister P.Chidambaram said on Friday that the government was keeping a close look on the overall price situation as the annual inflation reached a level of 4.41 per cent, according to latest weekly data.
“Whatever steps are needed will be taken. We are watching the situation carefully. Let me say the rise is mainly due to pressure on primary articles and seasonal factors,” Chidambaram said.
Higher food prices pushed the wholesale price index (WPI) inflation to 4.41 per cent for the week ended July 14, up from 4.27 per cent in the previous week. Prices of vegetables increased by seven per cent during the week. Inflation was 4.62 per cent in the corresponding week last year.
Inflation has been a major cause of concern for the policy makers with the government and RBI taking several fiscal and monetary policy measures to rein in the rising price line.
Reserve Bank of India (RBI) Governor YV Reddy called on Finance Minister P Chidambaram ahead earlier this week ahead of the quarterly monetary policy review on July 31.
The RBI has adopted a policy of monetary tightening, raising the cash reserve ratio (CRR) — the share of deposits that banks park as cash with the central bank — and the short-term inter-bank lending (repo) rate to contain inflation. While the repo rate was hiked by 0.25 percentage points to 7.75 per cent in March, the CRR has been raised by 0.50 per cent in two stages this year.
Reddy said recently that the slowdown in inflation and its macroeconomic impact were being analysed, and assuming no further escalation in international crude prices, the endeavour of the central bank would be to keep it under 5 per cent.