Inflation up at 5.44% on high food prices

The annual inflation rate for the week ended June 17, 2006 stood at 5.44 per cent, higher by 0.2 per cent, compared with 5.24 per cent recorded the previous week.

The wholesale price index-based headline inflation rate crossed 5 per cent last week on the recent hike in fuel prices.

Reserve Bank Governor Y V Reddy, had earlier this week, stated that the headline inflation in the country understated the problem of crude oil prices because the government had not allowed a complete pass through of the hike in international crude prices.

At the annual general meeting of BIS in Switzerland on 25 June, Reddy said, "In our case, pass through of higher oil prices has been halting and not full. Thus, the headline inflation in our country in a way understates the problem."

For the week ended 17 June, the primary articles basket registered the largest price rise. The index for food articles group increased by 0.8 per cent.

The index for non-food component of the primary articles basket increased by 1.1 per cent largely on account of a firm trend in prices of fodder, raw silk and raw cotton.

The index of manufactured products, which has the largest weightage in the wholesale price index, declined by 0.1 per cent.