Inflation quickens to nine-month high

Inflation quickens to nine-month high
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First Published: Sat, Mar 15 2008. 12 26 AM IST
Updated: Sat, Mar 15 2008. 12 26 AM IST
New Delhi: Inflation accelerated to a nine-month high, making it more difficult for the Reserve Bank of India (RBI) to reduce interest rates to bolster slowing economic growth.
Wholesale prices rose 5.11% in the week ended 1 March from a year earlier, faster than the previous week’s 5.02%, the ministry of commerce and industry said on Friday.
Crude oil jumped to an all-time high this week, putting pressure on the government to add to February’s increase in retail petrol and diesel prices. RBI governor Yaga Venugopal Reddy last week said rising food and energy prices pose “acute policy dilemmas.”
“Inflation is likely to further accelerate,” said Robert Prior-Wandesforde, an economist at HSBC Group Plc. in Singapore. “As inflation rises and growth moderates, the Reserve Bank and the government face an even tougher year than we thought previously.”
Crude oil for April delivery traded at $109.39 (Rs4,430) a barrel in electronic trading on the New York Mercantile Exchange at 6.25pm in New Delhi on Friday, after reaching a record $111 on Thursday.
Bonds fell for the second day on concern rising crude oil prices will further stoke inflation. The yield on the most-traded 7.99% note due July 2017 rose 5 basis points to 7.62% at the 5.30pm close of trading in Mumbai.
Finance minister P. Chidambaram on Friday said the government accords “topmost priority to controlling inflation” and “is prepared to take more steps to curb prices.”
He also told the Lok Sabha that a new index is being prepared to measure inflation more accurately.
The new index will take into account the current baskets of goods and services and hence would more accurately measure inflation, he said. Inflation rates are presently calculated on the basis of the average wholesale price index of some items.
Meanwhile, the commerce ministry on Friday revised the inflation rate for the week ended 5 January to 4.26% from 3.79%.
PTI contributed to thisstory.
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First Published: Sat, Mar 15 2008. 12 26 AM IST