Inflation climbs to 8.33% on dearer oil

The annual point-to-point inflation rate rose to 8.33 per cent for the week ended August 28, up from 8.17 per cent in the previous week. Rising prices of certain fuels, metal products and machinery, besides rising prices of primary articles, pushed up the wholesale price index (WPI) during the week.

The duty cuts in petrol, diesel, kerosene, LPG and steel have not succeeded in controlling the rise in the inflation level, which stood at 4.3 per cent in April.

The impact of the truckers' strike, ending August 28, has been included. However, the data shows a drop in the prices of fruits, vegetables and dairy products during the week.

"The price rise is widespread and it is rising prices of commodities like metal products, machinery and chemicals which is driving inflation now," said Saumitra Chaudhuri, economic adviser, ICRA.

Also, the increasing difference between the provisional and final inflation rates indicates the actual inflation level may be higher than the figures for the week.

All indicators point to a moderation in headline inflation, said Subir Gokarn, chief economist, Crisil. The drop in inflation would be obvious in the week ending September 18, when the level had crossed 5 per cent in the corresponding week last year.

At his recent press conference, the prime minister had said the inflationary pressure was on account of factors over which the government had no control "" droughts, floods, a steep rise in international oil prices and the truckers' strike, besides the overhand of liquidity.

However, he said the government would soon gain mastery over inflationary expectations. There were adequate stocks of foodgrains and foreign exchange stocks available.

Yesterday, Finance Minister P Chidambaram had said he expected a stable interest rate regime in the medium- term. The inflation rate in the corresponding week last year was 3.88 per cent.

The final index for the week ended July 3 was 7.08 per cent as against the provisional level of 6.16 per cent reported earlier. At a disaggregated level, the indices for all three major commodity groups rose during the week.

The index for primary articles rose by 0.1 per cent due to rising prices of food as well as non-food articles.

Prices of fodder, eggs, inland fish, arhar, urad, barley, masur groundnut seed, linseed and soyabean rose while prices of bajra, spices, maize and fruits and vegetables declined during the week.

Sunflower prices also fell 5 per cent while prices of raw jute, copra, cotton seed and raw rubber fell by 2 per cent. The index for fuel, power, light and lubricants rose by 0.6 per ent dur to an 11 per cent rise in naptha prices and a 4 per cent rise in prices of furnace oil.

The manufactured products index rose 0.2 per cent. Within this major group, prices of food products, textiles, chemicals and chemical products, non-metallic mineral products, basic metals, alloys and metal products, machinery and machine tools and of transport equipment and parts rose during the week. Prices for paper and paper products and for rubber and plastic products declined during the week.

Individual items whose prices rose sharply include ferro manganese, whose prices rose by a steep 25 per cent, copper bars and rods up 12 per cent, copper wires up 11 per cent.

Nuts and bolts up 7 per cent, springs up 6 per cent. Construction costs went up with prices of building bricks rising by 6 per cent while prices of jelly filled telephone cables rose by a steep 27 per cent.