The Hindu Business Line : Rising inflation: India may be neighbours’ envy

Chennai, April 4 The annual wholesale price index-based inflation rate could have hit a three-year high. But India’s price index could be the envy of its neighbours and other friendly nations.

For example, Myanmar, which is India’s main supplier of pulses such as black matpe, is facing an inflation rate of over 20 per cent. In Sri Lanka, the price index has increased above 15 per cent, while in Pakistan the rise is over eight per cent. Bangladesh and Bhutan are also suffering from a rate that is higher than India’s.

For those who are anguished over the seven per cent inflation rate, Zimbabwe can offer some solace. The African country has seen its inflation rate shoot above 1,000 per cent! And reports say that the country whose landscape is dotted with malls is seeing no buyers despite the shelves being filled to the brim.

Iraq is another country witnessing an inflation rate of over 50 per cent, while Afghanistan’s rate is averaging over 16 per cent.

Why so much? Look at China. In February, its inflation rate was 8.7 per cent, a 11-year high. And projections are that the rate will remain over eight per cent this year.

Though lower than India’s inflation rate, some of the developed countries too are witnessing a rate that is multi-year high. Inflation in Switzerland is at a 14-1/2-year high at 2.6 per cent.

Data show that in 2007, India ranked 79th among nations where inflation rate was high.

The current trend of inflation rate zooming is a common one across the globe, thanks to raging commodities prices. Wheat, corn, soyabean, palm oil, soyabean oil, metals, crude oil, rice all hit record highs last month.

Agricultural products, particularly food, form an important cog of the Consumer Price Index and while energy products have a significant say.

The International Monetary Fund’s commodity price index shows that food prices in February were up 65 per cent compared with 2005. Similarly, metal prices were up 70 per cent since 2005, while petroleum products index was at 175.7 per cent.

Rising demand due to buoyant economy in developing nations, production shortfall, higher crude oil prices and diversion of food crop for bio-fuel have all contributed to the runaway trend of commodity prices.

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