The country's inflation rate based on wholesale prices has crossed six per cent for the second time in a fortnight, underlining the government's worries that have prompted a squeeze on money supply and reduction in some import duties to rein in prices.
The rate of inflation has crept up to 6.11 per cent for the week ending January 20 in data released on Friday, primarily due to higher prices of food products such as pulses, fruits, vegetables and eggs.
After reaching a two-year high of 6.12 per cent a fortnight ago, the wholesale price index (WPI) based inflation had marginally come down to 5.95 per cent in the previous week.
Last week, the government had reduced customs duties on a host of items including cement, steel, aluminum, inorganic chemicals and edible oils "as part of its strategy to keep the prices of essential commodities under check".
Government officials said that the reduction in customs duties will reduce the landed cost of these oils and are expected to soften domestic prices.
Besides, the Reserve Bank of India’s (RBI’s) decision to tighten the liquidity by executing a 0.25 per cent hike in the repo rate (the short-term rate at which banks borrow from the RBI), is also expected to temper down inflation in the coming weeks, officials said.
The wholesale price index for all commodities for the week ended January 20, 2007, rose by 0.1 per cent to 208.5 from 208.3 for the previous week.
The index of food articles, which severely affects the common man, rose by 0.4 per cent to 214.6 per cent due to higher prices of eggs, condiments and spices (4 per cent each), pulses like arhar (2 per cent), moong and masur (1 per cent).
The prices of fruits and vegetables, besides maize and fish-marine also increased by one per cent.