Truckers' strike rises inflation to 5.6 pc

Mumbai, Jan 22: The thrust of truckers' strike is felt in this week's inflation. After a constant decline for ten weeks, inflation rose to 5.6 pc due to higher prices of edible items like fruits and vegetables.

Inflation, measured by movements in wholesale prices, rose by 36 basis points for the week ended January 10 from 5.24 per cent in the previous week. It was 4.36 per cent a year ago.

Among the items that became expensive during the week were fruit and vegetables (9 per cent), wheat (2 per cent) and spices, milk, ragi and rice (1 per cent each). The index of primary articles increased by 2.2 per cent.

Though the index of fuel items remained unchanged during the week, the manufactured items index rose by 0.2 per cent.

In the manufactured food products category, oil cakes became expensive by 8 per cent, canned fish by 43 per cent, and imported edible oil and coconut oil by 7 per cent each.

Items that reported decline in prices include unrefined oil (8 per cent) and groundnut oil (1 per cent). The prices of rubber and plastic products too went down marginally.

Sonal Varma, Economist said, "After a long time, inflation has surprised on the upside. Our hypothesis is that the nationwide truckers' strike could have caused a shortage in essential commodities and this price increase. Otherwise, the trend continues to be lower, due to falling commodity prices, input costs, and weakening demand, which is likely to prompt firms to cut prices to boost demand. We continue to expect repo and reverse repo rates to be cut by a cumulative 150 basis points each by mid-2009, as inflation nears the negative zone."

Calling it a temporary rise DK Joshi, Principal economist, CRISIL said, "I think it is only a temporary rise. Inflation will absolutely go down given the worsening domestic and global economic conditions."

OneIndia News (With inputs from Agencies)