Reflecting the impact of hiked fuel prices, the inflation data has shown the distressed picture by surging to 13 years high at 11.05 percent for the week-ended June 7 from last week’s data of 8.75 percent. However, the market experts believe that this week’s data is showing a partial influence of fuel price hiking, which would be divulged in the coming weeks.
The Wholesale Price Index (WPI), the inflation measurement data, released today is indicating that the forthcoming days are going to be agonizing for the government and for the public as despite of several efforts to rein the inflation; it is soaring high and high.
The inflation data, which was at 4.28 percent last year for the same week has now broken the 13 years record and looking to go much further in the weeks ahead. Previously, on May 6, 1995 inflation was on 11.11 percent for the week for the week ended to April 22.
According to WPI data, the fuel group index has surged 7.8 percent on the back of higher prices of petrol (11 per cent), light diesel oil (21 per cent), LPG (20 per cent), naphtha (17 per cent), furnace oil (15 per cent), aviation turbine fuel (14 per cent), high speed diesel oil (10 per cent) and bitumen (7 per cent).
WPI data index shows that this week, the food article has slipped down to 1.1 percent as against previous week’s data, but non-food articles would rose to 1.4 per cent, and manufacturing products to 0.3 percent.
In the primary items, the prices of condiments, marine fish and edible oils including sunflower oil by 6%, groundnut oil by 3%, soyabean and vanaspati by 2% and mustard oil by 4% have been increased while the prices of fruits and vegetables have been declined.
The prices of steel and iron have spiraled lofty in this week. Steel rose by 14%, pig and foundry iron by 11%, price of bar and rounds by nine percent, steel sheets by 4% while pipes and tubes by 2%. On the other hand, the prices of cement have softened a bit.
In textile articles, higher price of cloth, sacking bags and woolen have cumulatively raised the textile price index by 0.1%.
In manufactured product, the price of ceiling fans has escalated by 6 percent, while chemical product index by 0.2 percent on the basis of rising prices in all kinds of acids, caustic soda and blank cassettes.
This skyrocketing inflation is pushing the government to take some rough steps as all previous efforts to tame inflation seem inadequate. The Finance Minister in this regard has warned the cabinet that this soaring inflation can be proved as a death nail for the government in the forthcoming election next year.
He was agreed that the hiked price in fuels would strongly support to inflation, but it was necessary to hike the prices of fuels viewing the rocketing prices of crude oil in the globe. However, ‘we need to take some stronger steps in fiscal and monetary issues.
For taming inflation, the Reserve Bank of India has hiked the repo rate, the rate on which banks borrow money from RBI, by 0.25 percent. But, as experts believe, the apex bank can now raise Cash Reserve Ratio, the percentage of banks reserve to deposits and notes in RBI by 25 to 30 bsp while repo rate can be hiked by 50 basis points (0.50%).
In that case, the rate of interest in short term loans will be increased and purchasing the automobiles, homes and consumer durable products would be costlier while personal loan will also expensive.
The spiralling inflation has also affected the stock market and today Bombay Stock Exchange (BSE) has closed in red by dipping 516.70 points.
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