The Hindu Business Line : Costlier fruit, milk drive up inflation rate to 8.10%

Continuing its upward trend, the annual Wholesale Price Index-based inflation rose to a 44-month high of 8.10 per cent during the week ended May 17, up from a year-on-year increase of 7.82 per cent reported during the previous reported week. With prices of items including edible oils, iron and steel, fruits, dairy products staying at high levels, the provisional year-on-year inflation estimates rate continued the upward trend, data issued by the Ministry of Commerce and Industry showed.

Worrisome

“The 8.10 per cent inflation is worrisome...,” Finance Minister Mr P Chidambaram told a news conference. “We will do our best to contain, moderate and reverse headline inflation. We are doing our best and (will) continue to do our best,” he said. RBI has estimated that the inflation rate in the current fiscal year that began April is likely to be around 5.5 per cent. Inflation has been rising rapidly since January 2008 and the current inflation is the highest since the week ended 18 September 2004.

Across all heads

During the latest reported week, the rise in inflation was seen across all heads of the WPI. Inflation in primary articles rose to 8.86 per cent, after falling for two consecutive weeks to 8.31 per cent, mainly as fruits (9 per cent), milk (8 per cent) and spices (10 per cent) showed an increase in year-on-year prices. Inflation in primary articles has gone up by 512 basis points since December 2007.

Manufactured items

Inflation in the fuel group climbed further to 7.79 per cent, up from 7.39 per cent during the previous reported week, as the coal index (9 per cent) and mineral oils (11 per cent) showed increase in year-on-year price levels. Inflation in manufactured products also rose again to 7.84 per cent, up from 7.73 per cent during the previous week, as iron and steel (31 per cent), edible oils (11 per cent), dairy products and grain mill products (both 11 per cent) showed increase in year-on-year price levels. Inflation in the manufactured products has risen by 382 basis points since December 2007.

The Wholesale Price Index of all commodities was up at 229.6 points against 229 the previous week.

The Centre is mulling increasing the prices of petroleum products in a bid to stem the losses of oil marketing companies.

According to CMIE, the rise in overall inflation levels may continue as the international crude oil prices continue to remain high and the base of the WPI for Fuels is negative in the coming months. The current inflation in the fuel group is ruling at a 90-week high.

Final figures

Continuing its trend of upward revisions in inflation numbers, the final WPI-based inflation for the week ended March 22 was revised to 7.85 per cent as against the 7 per cent reported provisionally.