After three weeks of fall, inflation again up at 12.14%

New Delhi, Sep 18 (UNI) Like the Indian stock markets, inflation continues to display volatility moving down one week and up in another, as inflation data today showed that the index stood at 12.14 per cent for the week ended September 6 as compared to 12.10 per cent in the previous week.

While the index for the major group 'Primary Articles' rose by one per cent, it declined for the other two major groups, namely, 'Fuel, Power, Light and Lubricants' by 0.2 per cent and 'Manufactured Products' by 0.1 per cent.

Within the 'Primary Articles' group, the index for 'Food Articles' rose by 1.4 per cent, for 'Non-Food Articles' by 0.2 per cent and for 'Minerals', the rise was only marginal.

The Finance Ministry in its statement on inflation data said the rate of inflation year-on-year as conventionally measured, remained "stable".

It also took note of some details relating to the data issued by the Ministry of Commerce and Industry.

For instance, in the 'Primary Articles' group, out of a total of 98 items, 13 articles showed a decline in the prices in the current week as compared to the week ended August 30, 2008.

These included bajra, maize, jowar, arhar, mustard seed, turmeric, cashew nuts, tomato, dried chillies and asbestos. Another 27 articles have shown no increase in prices.

The August 30 data was the third consecutive week when the index moved Southwards. This raised hopes that monetray easing may be on the way and the Reserve Bank in its October review of credit policy may not resort to another dose of hiking the Repo Rate or the Cash Reserve Ratio (CRR).

The continuous increase in these two tools of the monetary policy has been choking manufacturing output and GDP growth.

The government worries are now compounded not only with inflation not being in a safe zone, but the fear that the US financial crisis may impact some Indian banks, even though the exposure of Indian banks to the the Lehman Investment Bank, which went into bankruptcy, has been negligible.

Nevertheless, the US financial turmoil may take its toll on FII flows, which is perhaps the reason for the high volatility on the Indian bourses--day after day, week after week and month after month.

The riddle of inflation, thus, poses a major challenge to the Indian policymakers primarily achieving high growth with reasonably high inflation.

India is no longer an isolated economy and what happens to the rest of the world finds its reverberations in the second fastest growing economy of the world.

The entire Asia, which is expected to be the fulcrum of future economic activity, is engulfed in battling inflation and keeping growths high.

So much so, the Dragon may see its lowest growth rate in the past several years and a possible slowdown in its much-hyped foreign flows.

Which way things will move from here becomes like an astrological puzzle where several influences are at work at the same time.

The results alone will show the power of the stars.

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