Inflation climbs to 7.87%

Higher prices of food drive up inflation for week ended Sep 11

Inflation rose marginally to 7.87 per cent for the week ended September 11 due to higher prices of food and manufactured products like edible oils. The inflation level rose 0.06 per cent from the previous week's level of 7.81 per cent.

The government said that inflation, though up marginally, should start coming down as it was now "stable".

The inflation level was 4.59 per cent in the corresponding week last year.

The gap between the provisional and final indices for the week ending July 17, went up further to 1.09 per cent with the final index revised to 7.61 per cent, as against the provisional level of 6.52 per cent reported earlier.

"It is stable now. It has just gone up marginally by second place of a decimal. It should start coming down from now," Chief Economic Adviser Ashok Lahiri said.

Finance Secretary DC Gupta said the government was continuously monitoring the situation and will not hesitate in taking further steps if required.

"Interest rates are expected to remain benign in the short-run. The Reserve Bank of India is monitoring the situation closely," he added.

Gupta also said the government was on course to rein in fiscal deficit at the budgeted level of 4.4 per cent of the gross domestic product due to a buoyancy in tax collections.

He also said the adverse effect of monsoons would be made up by improved performance in other sectors. The marginal rise in inflation comes amid the government's measures to rein in prices and Reserve Bank of India's cash reserve ratio (CRR) hike yet to make an impact.

The cuts are expected to suck out Rs 8,000 crore excess liquidity.

The Asian Development Bank in its update for Asian economies has said the inflation rate in India is likely to be 5.7 percent in 2004-05 and 6.8 percent in 2005-06.

Wholesale price index based inflation

Inflation rises 7.87% for the week ended September 11. It rose 0.06% from the previous week's level of 7.81%.

The government said inflation, though up marginally, should start coming down as it was now "stable".

The inflation level was 4.59% in the corresponding week last year.