Prices will drop soon: FM to House
India is taking steps to curb both 'cost-push' and 'demand-pull' inflation, Finance Minister Palaniappan Chidambaram said on Friday in the Parliament, as he assured members that prices would soon moderate.
His comments came an hour after government data showed that wholesale price index-based inflation stood at 4.52 per cent for the past 12 months till July 15, which was lower than 4.68 per cent a week earlier.
"We are taking steps to moderate 'cost-push' and 'demand-pull' inflation. The fiscal and monetary steps and the augmenting of supplies will moderate inflation," he said in the Parliament.
However, the data also showed a rise in the prices of some foods, cash crops, minerals and metals.
The Reserve Bank of India had on Tuesday raised its benchmark short-term interest rate by 25 basis points to six per cent, its highest in four years, to check inflation.
It warned that inflation risks would remain as domestic fuel prices still lagged a surge in global oil rates.
Fuel and metal prices have risen significantly across the world in the past few months, driving up input costs faced by Indian firms, the Finance Minister said in a reference to 'cost-push' pressures.
"Oil prices were at $23 a barrel in 2003/04. It has increased three times, and is now at $74 a barrel."
On the 'demand-pull' side, he said that recent supply shortages had boosted prices of wheat, pulses and sugar.