The Hindu Business Line : Inflation at 19-week high; tops 6 per cent

THE annual rate of inflation jumped to a 19-week high of 6.09 per cent for the week ending June 26, with the Government factoring in the spurt in coking and non-coking coal prices that was effected on June 16. According to data released by the Ministry of Industry on Friday, inflation as measured by the wholesale price index rose from 5.87 per cent during the previous week (week ending June 19). Inflation stood at 5.32 per cent during the same period a year ago.

Even as rising inflation has raised prospects of higher interest rates, the Finance Minister, Mr P. Chidambaram, has said the Government will take all possible steps to check inflation and current interest rates levels could be maintained. "We will take every step to moderate inflation. We have to adjust our sights according to what is happening, but today's stance is we think that we can maintain the current interest rates," Mr Chidambaram told reporters before the data was released.

Inflation had fallen to 5.87 per cent during the previous week after rising for five straight weeks, as the Government did not factor the 16.7 per cent increase in coal prices announced by Coal India Ltd on July 16.

With the spurt in coal prices being factored into the data for the latest week, the index went up from 197.8 during the week ending June 19 to 229 points. According to analysts, the fastest rise in prices since the week ended February 7 could lead the Reserve Bank of India to raise its benchmark rate from a 31-year low to prevent an expanding economy from fuelling inflation.

The WPI, for the week ending June 26 rose by 0.4 per cent to 184.7 points even as the index of Primary Articles' became cheaper. It declined by 0.5 per cent to 186.3 points due to a substantial fall in the price of food articles, even as non-food items' prices remained unchanged. The index was 186.2 points a year ago.

The fuel, power, light and lubricants' group index shot up by nearly two per cent to 275.2 points due to higher prices for coking coal (24 per cent increase), non-coking coal (16 per cent), furnace oil (five per cent), light diesel oil (four per cent), naphtha and bitumen (two per cent each) and petrol (one per cent). The index was 246.1 points in the previous year period. The index of Manufactured Products' group was up by 0.1 per cent to 163.9 points due to costlier food products, textiles, chemicals, basic metals and machinery. The index was 153.8 points a year ago.

The food Products' group index rose by 0.6 per cent to 173.2 points due to costlier coffee powder and rice bran oil (four per cent), gur (three per cent), solvent extracted groundnut oil, oil cakes, khandsari and imported edible oil (two per cent each) and cotton seed oil, groundnut oil and coconut oil (one per cent each). However, there was a one per cent fall each in the price of gingelly oil and sunflower oil.

The index for Textiles' group was up by 0.1 per cent to 136 points owing to higher prices for woollen cloth (two per cent) and cotton yarn-cones and hessian and sacking bags (one per cent each).

But prices fell for texturised yarn (three per cent), nylon filament yarn (two per cent) and synthetic yarn (one per cent).

The Chemicals and Chemical Products' group index surged by 0.1 per cent to 178.4 points due to seven per cent increase in the price of hair oil and three per cent in ammonium sulphate n-content.

The index of Base Metals Alloys and Metal Products' group was up marginally to 202.3 points due to six per cent price hike in lead ingots and two per cent in zinc ingots.

The Machinery and Machine Tools' group index was up by 0.1 per cent to 134.9 points due to costlier telephone instruments and rolling bearing (three per cent).

The index of Non-Metallic Minerals' group index declined by 0.2 per cent to 153.8 points due to marginal decline in cement prices, even as building bricks became costlier by two per cent.