Inflation shoots past 8% mark

PM may address issue today.

Inflation shot up to a three-and-a-half year high of 8.17 per cent during the week-ended August 21, mainly on account of higher fuel costs and a price hike in anticipation of the truckers' strike. The dip in inflation in the corresponding week last year also added its bit.

Inflation has doggedly risen from the previous week's figure of 7.94 per cent comes despite a number of steps, including duty cuts on petroleum products and steel, taken by the government to rein in prices.

The duty reduction on August 18 did not fully neutralise the increase in international prices of oil as diesel prices rose by 1 per cent during the week.

Chief Economic Advisor Ashok Lahiri refused to comment on the galloping inflation, saying, "the prime minister is speaking tomorrow, wait for him". Prime Minister Manmohan Singh will hold a press conference at his home tomorrow.

The jump in inflation is partly on account of the low base effect. In the corresponding week last year, the wholesale price index (WPI) based inflation had dipped to 3.82 per cent.

Rising prices of vegetables, diesel and manufactured items, including edible oils also pushed up the inflation level. In 2003, the upturn in inflation started with the week ended August 30 and accelerated from mid-September.

A downturn is widely expected to start by mid-September when the high base effect of last year's inflation level kicks in.

Prices of essential commodities had started rising in anticipation of the truckers' strike, which started on August 21. The full impact of the week-long strike in pushing up prices of essential commodities will show when the inflation figure is released next week.

The inflation for the week ended June 26 has been revised upwards to 6.95 per cent based on the final index, as against 6.09 per cent reported earlier on the basis of the provisional index.

The WPI rose by 0.2 per cent with the indices of primary articles and manufactured products moving up by 0.2 per cent while the index for fuel, power, light and lubricants rose by 0.3 per cent due to a 1 per cent hike in diesel prices.

The index for the major group of primary articles was up by 0.2 per cent due to a 0.2 per cent rise in prices of food articles and despite a 0.1 per cent fall in prices of non-food articles. Prices of coffee were up 6 per cent, prices of vegetables went up by 4 per cent, of maize and eggs by 3 per cent each and of fruits by 2 per cent.

Fodder prices rose 5 per cent, linseed and gingelly seed prices rose 4 per cent each and castor seed prices were up 2 per cent during the week.

Prices of beef and buffalo meat, however, fell 7 per cent, of marine fish and poultry chicken by 3 per cent and of raw rubber by 9 per cent during the week.

The index of heavy-weighted manufactured products' group was up by 0.2 per cent because of costlier food products, tobacco, textiles and machinery.