Inflation sizzles at 8.1 pc, no relief in sight
Inflation is showing no signs of easing. The latest price data released on Friday showed the provisional rate of inflation for the week ended May 17 stood at 8.1 per cent, up from 7.8 per cent a week earlier.
Worse, actual esitmates that follow with a time lag have been turning out to be much higher, and going by the trend so far, the inflation rate might already have breached the 9 per cent mark by now.
Finance minister P Chidambaram described the price situation as worrisome and apportioned a part of the blame to persistent rise in global crude prices, which are hovering over $130 per barrel.
"There is yet no sign of a decline in the inflation rate. We do not know if we have peaked yet," Chidambaram said.
The minister’s comments on Friday contrast with his earlier stance that inflation rate would begin to taper off because of measures taken by the government to ease availability of essential commodities.
The government has taken a series of steps — including scrapping import duty on key steel inputs like metallurgical coke and zinc, and edible oils. It also banned export of a host of commodities, imposed curbs on futures trade and coerced steel and cement companies to cut prices.
"Prices of items produced in India are moderate. But for products globally procured, prices are rising. We will take more measures if needed," he said.
Reserve Bank of India (RBI) governor YV Reddy recently said India's official economic data does not accurately reflect inflation because of subsidies for oil. Unless there is decline in crude oil prices it is difficult to reduce prices, Chidambaram said.
Pressure is mounting on the government to revise retail prices of petrol, diesel and LPG, which are currently sold at highly subsidised rates – a practice that’s threatening to bankrupt state-owned oil companies. The government is debating how to protect the oil firms, while minimising the impact of any price rise on the consumer.