Inflation trebles to 4.78%

Inflation trebles to 4.78%
Business Standard, December 15, 2009, Page 6

BS Reporter / New Delhi

Experts see inflation at 7 % at the end of 2009-10, expect increase in CRR by December.

The headline inflation rate, as measured by the wholesale price index (WPI), surged to 4.78 per cent for November, primarily due to rising prices of primary articles, especially food items.

The inflation rate for October was 1.34 per cent. It was 8.48 per cent in November 2008. The build-up of inflation in financial year 2009-10 has been 7.54 per cent, as against an increase of 3.86 per cent in the corresponding period of 2008.

Analysts and economists see inflation at around 7 per cent at the end of the current financial year and expect a rise in the cash reserve ratio (CRR) by then.

The Reserve Bank of India (RBI), in its October policy review, raised its WPI inflation projection on a point-on-point basis for the end of 2009-10 to 6.5 per cent with an upside bias. Its earlier projection was 5 per cent.

“The inflation rate for manufacturing has also climbed up along with that for primary articles, giving clear evidence that inflation is climbing. It will be on RBI’s radar and we maintain our earlier call of a cash reserve ratio (CRR) hike in December,” said Shubhada Rao, chief economist with Yes Bank.

The finance ministry also expressed concern over rising food prices but said the rise had been along expected lines.

“It is not as if we are taken by surprise or that there is a cause for any special emergency measure at this stage,” said Finance Secretary Ashok Chawla.


Primary articles rose 11.84 per cent during the month compared to 12.06 per cent in the corresponding period in 2008.

Manufactured products grew 3.99 per cent in November as against 7.81 per cent in the same month last year.

Food prices continue to rise and have registered a rise of 16.71 per cent in November, against 10.31 per cent in the same month last year.

Rise in the prices of cereals and pulses continued to be in double digits at 13.57 per cent and 35.22 per cent, respectively, for the month.

Sugar continued to be expensive with an inflation rate of 53.76 per cent.

Meanwhile, Finance Minister Pranab Mukherjee today said rising inflation, primarily due to dearer food items, was a matter of concern.

Fuel prices also rose by 1.25 per cent on a week-on-week basis, while the year-on-year inflation rate stood at -0.89 per cent for the month.