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Our Bureau

New Delhi , Oct. 13

The Finance Minister, Mr P. Chidambaram, on Friday said that the latest increase in the country's inflation would not exert pressure on interest rates and that there was ample liquidity in the system.

"No, there is ample liquidity in the system," Mr Chidambaram said, when asked as to whether the latest increase in inflation would put pressure on interest rates.

The wholesale price index (WPI) rose to 5.16 per cent for the week ended September 30 from 4.77 per cent in the previous week, the latest data released on Friday showed. The Finance Minister attributed the latest increase in inflation to costlier electricity, industrial fuels and further increase in pulses, cereals and edible oils.

He observed that inflation would hover between 4 per cent and 5 per cent due to supply constraints. "In the medium term, moderation will set in when supply constraints are addressed. The supply constraints would be addressed only when new sugar and wheat comes in," he said.

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