The Hindu Business Line : Inflation scales up on costlier fuel, metals

THE annual wholesale price index-based inflation surged to a new three-and-a-half year high of 7.96 per cent during the week ended August 7, largely due to rise in fuel and metal prices, according to the data released by the Ministry of Commerce and Industry.

The year-on-year inflation, which was 7.61 per cent for the week ended July 31, has been heading north since June this year following a surge in prices of fuel, commodities and fruits and vegetables.

Reacting to the inflation figures, the Chief Economic Adviser, Mr Ashok Lahiri, said the Government's decision to cut duties on petrol and diesel and a revival in monsoon rains was expected to rein in inflation.

The rise in the index during the latest recorded week was mainly due to a 1.5 per cent increase in the energy index to 278.5 due to higher prices of aviation turbine fuel (ATF), diesel and petrol following a surge in global crude prices.

Manufactured products, accounting for nearly 64 per cent of the inflation index, rose 0.1 per cent in the week to August 7, led by higher food prices.

The index of primary articles' group rose marginally by 0.1 per cent to 191.8 points due to surging prices of food articles. The index was at 179.7 points during the previous year. The fuel, power, light and lubricants' (FPLL) group index shot up by 1.5 per cent to 278.5 points with increasing prices of light speed diesel oil (9 per cent) and naphtha (5 per cent), apart from costlier petrol, diesel and ATF.

The manufactured products' group index, which has the highest weightage in the overall index, was up marginally by 0.1 per cent to 165.3 points even as food products became cheaper because of increasing prices of tobacco, textiles, wood, paper, chemicals, basic metals and machinery.

Among primary articles, the food articles' index was up 0.2 per cent to 187 points owing to costlier poultry chicken (3 per cent), eggs and masur (2 per cent each) and fruits and vegetables, moong and bajra (1 per cent each). However, prices declined in the case of fish-inland (3 per cent) and condiments and spices (2 per cent).

The index of non-food articles' fell by 0.2 per cent to 195 points due to fall in prices of raw wool (6 per cent), raw jute (3 per cent), castor seed (2 per cent) and raw cotton and gingelly seed (1 per cent each).

But prices increased for raw silk (6 per cent), fodder and copra (2 per cent each) and tobacco, cotton-seed, rape and mustard seed and groundnut seed (1 per cent each).

The Base Metals Alloys and Metal Products' group index shot up by 0.6 per cent to 206.6 points due to higher prices of bolts and nuts, steel ingots and aluminium foils, among other items.

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