Inflation up at 11-month high; rising towards 6 pc

Thursday, March 20, 2008 | | |

NEW DELHI: Inflation rose by a whopping 0.81 per cent to touch 5.92 per cent during the week ended March 8, as metal prices soared and food items turned expensive in line with the global trend.

With inflation just short of six per cent mark, it may not allow the Reserve Bank to cut interest rates despite sluggish industrial growth, analysts said.

"It seems that RBI will maintain status quo as far as interest rates are concerned in the immediate future," Crisil Principal Economist D K Joshi said.

Wholesale prices-based inflation rate surged despite high base of 6.51 per cent a year-ago.

"Our inflation has got linked with the global price trend as commodity prices and food prices are contributing maximum to the domestic inflation data," Joshi said.

During the week, basic metal, alloys and metal products group rose by 6.7 per cent. Prices of blooms and billets and slabs went up by 30 per cent, wire of all kinds by 25 per cent, steel and tensile plates by 20 per cent and bars and rods by three per cent.

Among food products prices of arhar, gram and moong went up by three per cent. At the same time, fruits and vegetables, maize, and condiments and spices were expensive by one per cent.

Manufactured products like imported edible oil, coconut oil, mustard oil, also turned dearer. The Government had announced a ban on export of all edible oils with effect from March 17, for one year to curb their rising prices.

There has been spurt in global oil prices, as many countries are using them for bio-fuel.

With the rupee reversing its appreciating spree of late, imports of both petroleum and non-petro products are no longer cheaper. "In fact, we are importing inflation," Joshi said