High inflation rates hurt everybody, particularly the poor whose incomes are not indexed to prices, minister of state for finance SS Palanimanickam said in a written reply in the Rajya Sabha.
He said high inflation puts pressure on interest rates leading to a rise in project costs and investment.
It also tends to reduce real interest rates, adversely affecting the savings rate, Mr Palanimanickam said.
The 52-week average rate of inflation was 6.5% as on January 29, he said adding the rate was higher than the average of 5.5% on the corresponding date in 2003-04, but was the same as the revised inflation projection at 6.5% by RBI for the last fiscal.
The average inflation rate declined marginally to 6.4% as on February 5 and remained at the same level during 2004-05, he said.
He said anti-inflationary policies of the government include strict fiscal and monetary discipline, rationalisation of excise and import duties of essential commodities so that there is no undue burden on the poor, effective supply-demand management of sensitive items through liberal tariff and trade policies and strengthening the public distribution system.