Despite firefighting, inflation up at 6.46%

The annual rate of inflation rose to 6.46 per cent for the week ended March 3, 2007, compared to 6.10 per cent for the previous week. The increase was mainly on account of higher prices of cement, fish-marine, fruits, vegetables and aviation turbine fuel.

The latest data confirms that despite several measures aimed at containing inflation, the rate continues to remain above the 5-5.5 per cent level set by the Reserve Bank of India for 2006-07.

The data came even as Finance Minister P Chidambaram assured the Lok Sabha today that the government will take all steps to moderate inflation.

"I recognise the burden on the people, but this burden will ease over the next weeks and months," he said. The minister added he has asked all states to start de-hoarding operations to contain inflation. Vegetable prices soared by 7 per cent and cement became expensive by 4.4 per cent, a ministry of commerce release said.

Cement manufacturers had raised prices after hike in excise duty by Rs 200 from the earlier level of Rs 400 per tonne.

Some part of the rise in inflation is also because of the low base effect, since inflation stood at just 3.86 per cent in the corresponding week last year.

"Looking at the trend the inflation will still remain elevated for 2-3 weeks. The high inflation figure is due to the low base-year effect. But we may end the year within the figure desired by the RBI," Samiran Chakraborty, chief economist, ICICI Bank said.

Economist Shankar Acharya said: "Inflation will remain in the 6 to 6.5 range for at least two months. But prices of onion have come down and with good wheat harvest expected this year, prices of essential commodities will come down, resulting in lower inflation."

The index of manufactured products, which has a weightage of 63.75 per cent in the wholesale price index, rose by 0.2 per cent to 182.9 points. Prices of manufactured products like oil cakes and wires and cables also increased by 2.5 per cent and 4.1 per cent respectively.

While the index of fuel, power, light and lubricants, which has a weightage of 14.23 per cent, rose by 0.2 per cent to 319.5 points due to higher prices of naphtha, bitumen, aviation turbine fuel and furnace oil (2 per cent each).