Inflation static at 7.34%

The wholesale price index-based inflation remained at 7.34 per cent in the week ended November 20, the same as in the previous week despite lower fuel prices. The impact of the cut in petrol prices, effected on November 15, was offset by higher prices of primary articles.

Inflation, which was 4.5 per cent at the beginning of the fiscal year, rose to 8.7 per cent in the week ended August 28. Since then, it has come down to 7.3 per cent. However, the level is higher than what the economy has been used to for some time. The last time the WPI-based inflation had crossed 8 per cent was in early 2001.

The Bharatiya Janata Party and its allies had staged a walkout in the Lok Sabha on Wednesday to criticise the government over rising prices. Finance Minister P Chidambaram told the Lok Sabha on Friday that containing inflation was high on the government's agenda.

"Anti-inflationary policies of the government include strict fiscal and monetary discipline, rationalisation of excise and import duties of essential commodities so that there is no undue burden on the poor, effective supply demand management of sensitive items through liberal tariff and trade policies, and strengthening the public distribution system," Chidambaram said in a written reply.

With the railways raising freight rates for most commodities by 7.7 per cent because of higher diesel and steel prices, inflation was expected to go up.

However, economists said the freight component of items like iron and steel and cement was very low and not much of an impact was expected, unless companies decided to piggy back on the hike to raise prices.

Chidambaram said as of November 6, four items -- minerals, coal, petroleum products and metals group, with a weight of 17.5 per cent on the wholesale price index -- accounted for 64 per cent of overall inflation.

"There has been a hardening of international prices of these commodities due to a surge of global demand. Therefore, a major part of our inflation can be said to be imported."

Inflation on the basis of the final index for the week ended September 25 was revised downwards to 7.33 per cent against 7.38 per cent reported earlier on the basis of the provisional index. Inflation was 5.48 per cent in the corresponding week last year.

At a disaggregate level, the index for the group of primary articles rose by per cent and that for manufactured items rose by 0.1 per cent. However, the index for fuels fell by 0.7 per cent during the week.