New Delhi: The real inflation is hovering at around 8% as against the existing over 12%, if the prices of all goods and services such as construction, hotels and financial services are taken into account.
GDP growth at market prices stood at 16.3% during April-June 2008, according to the figures released on Friday, while economy grew by 7.9% when measured at constant prices.
It implies that the real inflation in the economy stood at 8.4% during that period, said an economic adviser in the Ministry of Finance.
The real inflation is GDP at market price minus GDP at constant price. It measures movement in prices of all sectors of economy.
He said “since services, which account for more than 55% of the national income, are not taken into account in the wholesale price index, it does not not truly reflect rise in prices”.
The real inflation is 8.4% according to figures on national income, he said. It should also be considered as measure of increase in prices for taking policy decisions.
As per the industry classification, prices have gone up by 10.5% in the construction sector, followed by financial sector at 10.3% and 9.6% in the manufacturing sector.
Crisil Principal Economist D K Joshi said real inflation is on expected lines. It does not hold any surprise.
Inflation at over 8% measured that way, is still a cause of concern for the government and RBI, as it stood at 5.9 during the corresponding period last fiscal, said the economic adviser.
According to wholesale price index, the inflation stood at 12.40% for the week ended August 16.