BackCooling measures fail to click; rate of inflation rises to 6.1%
Cooling measures fail to click; rate of inflation rises to 6.1%
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Inflation resumed its accelerating trend, jumping to 6.10% for the week ended February 24, compared to 6.05% in the previous week, as the wholesale price index went up to 208.8 from 208.6, the government said on Friday.
The small rise was mainly attributed to manufactured products, especially medicine prices which went up 6%.
Over the last month, the Union government has taken a series of measures to supplement supply of select food items, even as the Reserve Bank of India (RBI) has continued to tighten money supply conditions to manage demand in the economy.
In most commodities though, year-on-year price rise continued to be in double-digits, implying that the government’s measures to smoothen supply wrinkles were yet to have a cooling impact on prices. Inflation has remained at 6% and above for last two months now, compared to an average of 4% same time last year. The latest revised index number, released on Friday, revealed that inflation was close to 6% by the end of last year. Compared to the provisional number of 5.58% for the week of December 30, 2006, the revised number is 5.90%.
Year-on-year, food articles showed a 10.20% price rise from the week of February 25, 2006, while in pulses, fruits and vegetables, and oilseeds, it was 17%, 15% and 26%, respectively. “Supply-side (response) is indeed a durable answer to inflation. More wheat, more rice, more sugar, more pulses and more oilseeds is the answer," finance minister P. Chidambaram said.
Inflation in many non-food manufactured articles too has remained high. Basic heavy chemicals rose 16% year on year, basic metals and products by 16%, and minerals by 22%. Rajiv Kumar, director, ICRIER, said: “Since the manufacturing sector had contributed 62% to the current inflation, the government needs to shift focus from primary commodities."
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