Inflation rises again, sets record for 14 years

New Delhi: The annual rate of inflation inched closer to the 12-per cent mark at 11.98 per cent for the week ended July 19 to reach the highest level in nearly 14 years.

The annual rate of inflation, based on wholesale price index, was 11.89 per cent for the week before.

The data on wholesale prices released by the Commerce and Industry Ministry on Thursday showed an increase of 0.1 per cent in the price of primary articles, including food articles for the week under review.

The index for manufactured products rose 0.2 per cent due to higher prices of oilcakes and sugar, while the index for textile group rose by 0.9 per cent and that for machinery and machine tools was up 0.1 per cent.

Alarmingly, the final index for the week ended May 24 showed that the annual inflation rate actually stood at 8.9 per cent, compared to 8.24 per cent reported earlier, based on provisional statistics.

“Inflation, on a week-on-week basis, has continued to remain stable,” the finance ministry said in statement, soon after the wholesale price data was released here. “The wholesale price index moved up only marginally.”

The latest data has not taken into account the anti-inflationary measures that were announced by the Reserve Bank of India (RBI) Tuesday, which saw a key interest rate being hiked by as much as 50 basis points.

The central bank had also revised upward the cash reserve ratio - the minimum cash commercial banks have to retain against deposits - by 25 basis points in a bid to curb liquidity in the system and tame inflation.

Prime Minister Manmohan Singh has announced that bringing down prices would be the top priority for the UPA government.

In fact, the Reserve Bank has said that it intends to bring down the inflation rate to 7 per cent by the end of this fiscal, but also made it clear that it only expected prices to ease from the second half of the third quarter.

“At this juncture, a realistic policy endeavour would be to bring down inflation from the current level of about 11-12 per cent to a level close to 7 per cent by March 31, 2009,” Reserve Bank of India Governor Y V Reddy said.

“It is expected that inflation would moderate from the current high levels in the months to come and noticeable decline in inflation can be expected towards the last quarter of 2008-09,” he said.