Inflation rises to five-month high

Costlier potato and cereals pushed up May inflation to a five-month high of 6.01 per cent, prompting the Centre to ask the states to take effective steps against speculative hoarding in the wake of weak monsoon fears. Experts apprehend the likelihood of poor monsoon coupled with rising oil prices on the back of political tension in Iraq, may further aggravate the domestic scenario.

The rise in inflation has been mainly due to 31.44 per cent increase in prices of potato, 19.40 per cent in fruits and 12.75 per cent in rice, according to the official data on Wholesale Price Index (WPI) based inflation. The food inflation stood at 9.50 per cent last month, while the manufactured inflation was 3.55 per cent.

‘The government is seized of the matter and is committed to ease supply side constraints. The rise in prices of food articles can also be attributed to withholding of stocks on account of apprehension of a weak monsoon,’ finance minister Arun Jaitley said.

He also said the state governments should take effective steps to ensure that hoarding is discouraged. ‘The government is committed to take measures which will positively impact the GDP and result in higher growth than expected. I am hopeful that the inflation which is moving upwards now would eventually come down,’ Jaitley said.

Such high level of inflation was witnessed last in December when it was at 6.4 per cent. Referring to the rupee slide against dollar, Jaitley said the government is watching the movement of the domestic currency closely. ‘The instability of rupee is essentially because of Iraq oil shocks and global fear of oil price rise,’ he said.

The rupee on Monday slipped below 60-mark and closed sharply down by 39 paise at a six-week low of 60.16 against the dollar on sustained demand of the American currency from oil importers, amid rising oil prices.

Next Story
Share it