Inflation rate at 11.42% leads to political

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New Delhi, Jun 27 (UNI) In what would be a continued source of consternation and worry for the government, the inflation rate today touched a 13-year high of 11.42 per cent in the week ended June 14 as compared to 11.05 per cent for the previous week.

The highest increase in the Wholesale Price Index is in the 'Mineral' group with the group as a whole recording a 3.7 per cent increase.

'Food, Power and Lubricants' group registered an increase of 0.5 per cent as compared to 7.4 per cent recorded in the week ended June 7.

This indicates that inflation being caused laregly by just one single factor is now more spread in this week as compared to last week's inflation data.

This had prompted Finance Minister P Chidambaram to state that as much as 94 per cent of the inflation was a result of hike in 'Fuel, Power and Lubricants' group.

The following are the groups which recorded an increase: Primary Articles 0.2 per cent, Food Articles 0.2 per cent, Manufactured Products 0.6 per cent, Food Products 0.7 per cent, Textiles 0.7 per cent, Leather and Leather Products 1.1 per cent, Chemical and Chemical Products 1.4 per cent, Basic Metals and Alloys 0.3 per cent and Machinery and Machine Tool group 0.4 per cent.

On the other hand, the only group which recorded a decline is Non-Food Articles registering a 0.5 per cent fall.

However, some items did show a downward tendency. These are 'masur,' 'fruits and vegetables' by 0.1 per cent each; safety matches and toothpaste one per cent each; and lead ingots and zinc ingots one per cent each.

Data thus shows that inflation is now taking in its fold more and more items and groups.

The political storm brewing over inflation continues unabated giving a handle to the Oppostion to browbeat the government regarding its inability to bring the prices under check.

BJP General Secretary Ravishankar Prasad expressed alarm at the data released this morning, saying that a ''totering government led by a sulking Prime Minister" has no solution to the riddle of inflation.

The spiralling inflation has led to an across the board increase in interest rates. The first signal came from the biggest bank -- State Bank of India -- followed by the Union Bank with the two banks raising lending rates by 50 basis points each.

Some other Banks treaded the same footsteps-- Punjab National bank and Indian Bank ioncreasing their PLR by 50 bps each.

A determined Central Bank out to put out the fires of inflation took drastic monetary measures in a dual act -- raising repo rate by 0.5 per cent and hiking Cash Reserve Ratio by 0.5 per cent.

It appears that the fight is now resulting in a tiff between the Finance Ministry and the Reserve Bank of India.

RBI Governor Y V Reddy gave an indication of the lack of harmony between the two premier institution which governs the economic destiny of the nation by saying that the Central Bank would be constrained in articulating its policy if directions and signals from the Finance Ministry diverge from what it wants to do.

Mr Chidambaram has admitted that double digit inflation is here to stay for some more time and one is still unsure whether cement and steel prices would move Southwards.

Eds: Pick up suitably from earlier series.


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