News: Indian inflation tops 6% again, FM vows action

(TT 03/02/2007) New Delhi - Alarmed over the inflation rate touching 6.11 per cent for the week ended January 20, the government today promised to take steps to contain it. Inflation has crossed the 6 per cent mark twice within a fortnight.

Since the prices that consumers pay normally rise faster than wholesale prices, the burden on the urban poor and middle-class is higher than that reflected by the 6.11 per cent rate. Besides, these provisional estimates are generally revised upwards in subsequent calculations.

Finance minister P. Chidambaram said the government is concerned about skyrocketing inflation and steps are being taken to contain it.

While chairing the meeting of the parliamentary consultative committee attached to his ministry, Chidambaram said the present runaway inflation is the result of high growth and expressed confidence that the government will “gain mastery in dealing with it”.

The sharp increase in prices of food articles, including pulses like arhar and moong, fruits, vegetables, eggs, textile, wool, sugarcane, coupled with that of metal and paper products, has led to the increase in overall inflation.

The cut in customs duty on edible oil, cement and other manufacturing products, along with the RBI’s liquidity tightening measure announced on January 31 will take some time to dampen the rising prices due to a time lag factor, said government officials.

The finance ministry feels that the current round of inflation is a monetary phenomenon and is also being driven by supply-side constraints especially in food products.

This is especially worrying for the Manmohan Singh government as Assembly polls are round the corner in four crucial states.

The wholesale price index for all commodities for the week ended January 20, 2007, rose by 0.1 per cent to 208.5 from 208.3 for the previous week.

Inflation was just 3.86 per cent during the week ended January 7, 2006 and 4.24 per cent as on January 21 last year.