The last inflation number I have at the time of writing is the one released on June 6, 2008. On a year-on-year basis, it shows a rise of 8.24 per cent in the Wholesale Price Index (WPI). This, of course, does not factor in the direct and indirect impact of the rise in the administered prices of petrol, diesel and cooking gas. Including that, the rate is surely slated to cross 9 per cent, if not touch double digits, in the coming weeks.
At even the last available number, G-sec yields are near zero in real terms, and there is a debate in the media about whether the central bank would increase interest rates further.
But first, the increase in petro-product prices: One is not clear what the rise is intended to achieve other than giving Marxists reason to raise their hackles, and arming the BJP with another weapon. In principle, there could have been two objectives:
1. Increasing the prices in order to give incentives for conservation and for development of alternate energy sources. Indeed, from a long-term perspective, this should be a priority given that hydrocarbon resources are limited and the high oil price has most probably come to stay. Clearly, the announced rise is most unlikely to achieve this objective
