Inflation up at 5.94%, 2003-04 target distant

The government acknowledged that it would be difficult to achieve the target of 4 to 4.5 per cent inflation rate set for 2003-04. The weekly Wholesale Price Index-based inflation rose to 5.94 per cent for the week ended February 21.

Chief Economic Adviser to the Finance Ministry Ashok Lahiri told reporters the annual inflation rate would exceed the Reserve Bank of India's estimate.

Lahiri said a rise of 25 to 30 basis points in the inflation rate would not lead to a transmission effect on interest rates at the moment.

"I don't think the money market conditions are tight yet," he said, justifying his confidence.

The high-powered Price Monitoring Board under Cabinet Secretary Kamal Pande, meanwhile, reviewed the supply and demand position of key commodities, including edible oil, onion and sugar, today.

The meeting considered the need to set up a reserve to even out the impact of the volatility in edible oil prices.

The board has been monitoring the price situation in the country every week to ensure that the inflation rate does not spiral. Lahiri said the prices of edible oil and sugar would start falling in the next 7-10 days, mainly because of the easing of international prices. He said the rise in sugar prices was mainly because of festivals and would fall after Holi.

The WPI surged by 1.7 per cent, from 5.84 per cent registered the previous week. The rate of inflation recorded is 41 basis point higher than what was registered in the same period last year.

The commerce ministry release said a sharp rise in the index of primary articles, including poultry chicken, fruits, vegetables, and costlier manufactured products pushed up the inflation.

The index was up by 0.3 per cent to 180 points from 179.4 points registered in the previous week, despite fuel price remaining firm for the fourth consecutive week.

It was also 5.9 per cent higher than 169.9 points recorded in the same period last fiscal.

The government has also revised the inflation rate during the week ended December 27 upwards by 1.91 per cent to 5.86 per cent compared to the provisional level of 5.75 per cent.