Annual inflation still within RBI projections

Skyrocketing inflation may have sent the government and the central bank into a firefighting mode with each adopting measures to arrest rising prices, but the current average inflation rate for this fiscal is still within the Reserve Bank's projection of 5 to 5.5%.

Despite inflation surging to over a two-year-high of 6.73%, the average inflation rate for FY07 (up to February 3) stands at 5.2%, as per data released by the Finance Ministry.

This average rate of inflation is also only the fifth highest in the past nine financial years (from FY99 to FY07), some of which have witnessed average inflation scale to much higher levels.

The average inflation rate was the highest in FY01 at 7.2%, followed by 6.4% in FY05 and 5.9% in FY99.

During the past 9 years, inflation peaked at 8.8% during the week ended January 13, 2001.

Economists said the the country's resistance level to inflation has increased quite a lot in the recent years. That is why, the government and RBI started anti-inflationary measures much before it rose to 6.73%.

And now when inflation has touched a two-year high, the government was forced to cut petrol and diesel prices, with many more such steps expected to be in the offing.

The Reserve Bank has already raised the overnight lending rate, Repo, by 0.25% and also announced a 0.50% hike in cash reserve ratio to contain inflation, while the Forward Markets Commission has banned tur and urad from futures trading.