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India’s inflation rate has shot up to a three-and-a-half-year peak of 7.57 percent. The inflation has been primarily driven by higher food prices and some metals. the government has assured that the prices would come down very soon.
The wheat procurement by government agencies this season have crossed 150 lakh tones.
“Government agencies have procured 154.2 lakh tonne wheat on May 1 as compared to 82.4 lakh tonne on the same day last year,” it said in a statement.
The pace of procurement in the current season is also faster as compared to that in the last season, the statement said.
The inflation rate, which was 7.33 percent last week, reached a high of 7.57 percent following a spike in prices of rice, milk, tea, vegetables and steel sheets, a key intermediate product for construction and automobiles, rose.
Economics expect food grain prices to come down marginally in wake of better procurement, but cautioned that pressure on inflation was likely to continue for several months.
The rise in inflation rate was also partly due to a statistical phenomenon called the “base effect”. As inflation rate is measured on a year-on-year basis, a lower rate last year could translate into a high rate in the current year even though the actual price rise may not have been as high.
The prices are espected to moderate marginally in wake of the good procurement.
The wholesale price index based inflation rate has hovered above 7 percent in the last few weeks, forcing authorities to take a series of fiscal and monetary steps.
The government has banned export of certain basic staples like rice and lentils and cut customs duties on other items to try to rein in inflation.
On Tuesday, the Reserve Bank of India (RBI) raised cash reserve ratio (CRR), the amount of funds banks have to keep as deposit with the central bank, by 0.25 percentage points to 8.25 percent to tame inflation.
Source: HT
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Arun Pal Singh