By IANS
New Delhi : India’s annual rate of inflation shot up to a three-year high amid worries from industry that the central bank will intervene with monetary controls that could hit manufacturing growth.
The annual rate of inflation, based on the official wholesale price index, shot up to seven percent for the week ended March 22, from 6.68 percent for the week before, due to higher prices of essential items such as vegetables.
The inflation rate was already ruling at a 13-month high during the previous week, as per data released by the commerce and industry ministry here Friday.
The statistics further showed that prices of minerals shot up 38 percent in just a week between March 15 and March 22, while vegetables were costlier by as much as 4.9 percent.
Similarly, prices of lentils were up 1.4 percent, edible oils were costlier by 1.6 percent and cement prices remained unchanged.
Since the data pertained to March 22, it did not reflect the measures taken by the Indian government Monday when it cut import duties in a wide range of items including edible oils, while imposing a ban on exports of non-basmati rice.
Industry has been particularly worried and said the government has been taking sufficient corrective measures to contain inflation and hoped they would yield results and bring down prices of essential commodities to manageable limits.
“A few more steps should also be taken by the RBI to curtail interest rates, as also ensure sufficient liquidity to India Inc,” Venugopal N. Dhoot, president of the Associated Chambers of Commerce and Industry, said.
“With these steps the monetary market would relax and offer relief,” he said, adding that the prices of edible oils had already been coming down and that a similar trend was expected in the prices of other essential commodities.
The government also issued a fresh warning Friday to those who have been stoking inflationary pressures and said containing price rise was the top priority for the ruling United Progressive Alliance (UPA).
“We will not hesitate to take the strongest possible measures, including using some of the legal provisions we have against hoarding,” Commerce Minister Kamal Nath said on the margins of a tourism event in Singapore Friday.
“We have great supply side challenges in India at the moment with 15 million people moving from having one meal a day to two meals a day.”
The Reserve Bank of India (RBI) has already said that it will take monetary and fiscal steps to contain inflation – which it had hoped to contain below the five percent mark for the current fiscal.
Analysts now expect the central bank to take some immediate steps to check the inflationary pressures like hiking the benchmark interest rate to control the supply of money in the financial system.