NEW DELHI, Aug. 7: Inflation breached the 12 per cent mark to hit a 13-year high of 12.01 per cent for the week ended 26 July, up from 11.98 per cent the previous week, as prices of food articles and manufactured products rose steeply.
The inflation rate stood at 4.70 per cent in the corresponding week last year. The government, meanwhile, revised the inflation rate for the week ended 31 May to 9.32 per cent as against 8.75 per cent as reported earlier.
Inflation, as measured by the wholesale price index (WPI), continued to stubbornly rise despite monetary and fiscal measures adopted by the government and the Reserve Bank of India.
The RBI had on 29 July hiked its key lending rate for the third time in two months, taking it to its highest in seven years to quell price pressures, dampen demand and keep inflation expectations in check. This move, analysts said, would have its impact two weeks from now.
The apex bank hiked the benchmark short-term rate by 50 basis points, about 25 bps more than what the market had expected, and the cash reserve ratio, the amount of funds banks must keep on deposit with it, by 25 basis points to nine per cent to absorb surplus cash in the banking system.
While some quarters fear the moves by government as well as the RBI would impact the growth figures in the next fiscal, Planning Commision deputy chairman, Mr Montek Singh Ahluwalia, maintained that inflation was a short-term challenge and would be able to slowdown the pace of the economy’s growth to eight per cent or marginally less in the current fiscal.
He said on the sidelines of a Ficci conference today, that the softening of crude prices in the international market was a “welcome development”, and hoped that the domestic price situation would stabilise in due course. He also expected inflation to fall below the 10 per cent mark by the end of this financial year.
Inflation breaches 12 per cent barrier
The Statesman, India