Inflation up at 3.16% after 6-week fall

Inflation rose marginally to 3.16 per cent for the week ended September 3. The rise comes after it had been falling continuously for the last six weeks.

Wholesale price index-based inflation, the most widely-tracked measure of inflation in the economy, rose because of rising prices of food and non-food items, and industrial fuels.

The impact of the domestic oil price hike and of rising vegetable prices will be felt in the subsequent weeks.

Finance Minister P Chidambaram had said the domestic fuel price hike would have a "moderate" impact on inflation. Chief Economic Advisor Ashok Lahiri today said he would stick to the earlier forecast of an average 5-5.5 per cent inflation in 2005-06, adding that, "much will depend on international oil prices".

Economists also said the government would not be able to control the adverse impact of spiralling global crude prices that touched $70 a barrel recently.

Prices may go up further because of concerns about the damage to US crude production due to Katrina.

Crisil Chief Economist Subir Gokarn said, "We expect that WPI-based inflation will be 6 per cent during the fiscal year because the government will not be able to hold back the impact of international oil prices."

For the week ended July 9, the inflation figure based on the final WPI was 4.46 per cent against 4.14 per cent reported earlier on the basis of the provisional index.

At the disaggregated level, the index for primary articles rose 0.7 per cent. The index for food articles rose 0.8 per cent due to a 6 per cent rise in prices of fruits and vegetables, and the index for non-food articles rose 0.5 per cent during the week.

The index for fuel, power, light and lubricants rose 1.4 per cent due to a 19 per cent rise in naphtha prices, 12 per cent rise in furnace oil prices and 7 per cent rise in aviation turbine fuel prices.

Manufactured products index, however, fell 0.1 per cent during the week due to falling prices of food, chemicals, metals and machinery.