Rising prices of food products and some manufactured items pushed up inflation to 3.21% for the week ended November 17, against 3.01% in the previous week. However, the wholesale price-based index, inflation, was way below the RBI projection of close to 5% for this fiscal.
The annual rate of inflation stood at 5.56% last year. Finance minister P Chidambaram said inflation was expected to remain at the current rate. Curbing inflationary pressures has remained one of the government?s top priorities for the last one year. In April 2007, inflation levels had crossed the 6% mark after which the government took a number of fiscal and monetary measures to ease supply side pressures.
Some of the other factors that could have led to inflationary pressure was growing need for investments for an expanding economy and an increase in capital inflows by way of external commercial borrowings (ECB). As the RBI report said, FDI and portfolio investments also resulted in sharp appreciation of the rupee, which pushed inflation up.
Uncertainty in international oil prices with fear that it would touch the $100-per-barrel mark and volatile market also played its role in raising the inflation.
Globally there is a concern for inflation, mainly driven by high oil, commodity and food prices. Oil prices have risen to new heights and are expected to rise further. ?We need to factor in these price increases and adjust policies so that inflation does not get out of control,? Chidambaram had said.
The Centre has refrained from raising kerosene and petrol prices this year even though global oil prices have jumped to a series of all-time highs and state refiners are losing cash to the tune of $50 million a day. The recent data pertains to a period immediately after the RBI further tightened money supply in its mid-term policy review.