By IANS,
New Delhi : India’s annual rate of inflation based on wholesale prices rose to 8.43 percent in December, according to official data released Friday. The previous month the figure stood at 7.48 percent, but the Finance Minister Pranab Mukherjee said it was still lower than what was expected.
The government Thursday announced a slew of anti-inflation measures, including steps to regulate exports and imports, sale of onions through government agencies, utilising state-run companies to source pulses, and stringent action against hoarders.
The Prime Minister’s Office in a statement released late evening said that the frequent rise in food prices was unacceptable and blamed the current bout of inflation on the rise in prices of vegetables and fruits, which was more difficult to manage as these commodities were not held in public stocks.
As per data released by the commerce and industry ministry, the index for primary articles rose 3.5 percent during December, while those for fuels and manufactured products were up by 1 percent and 0.4 percent respectively.
As expected, the index for food products rose the fastest at 3.7 percent during the month.
“The WPI (wholesale price index) month-wise has been moderated. The way weekly fluctuations took place during the month of December, it was apprehended that the index may be little more,” Mukherjee told reporters here.
“It is little more than November but the change that has been taking place August onwards of monthly wholesale prices coming down…that trend has been maintained,” he added.
The finance minister also said given that India imports about 75 percent of its energy requirements, inflation could not always be contained by domestic economic and monetary policy measures.
“If there is a wide fluctuation of crude prices, any amount of your internal economic measure or policy measure cannot reduce it (inflation). All you can do is to give subsidy to help the consumers,” said Mukherjee, who was instrumental in putting together the steps announced to curb rising prices.
The rate of rise in prices as measured by wholesale prices has eased in the past few weeks due to aggressive monetary tightening policy adopted by the country’s central bank.
The recent rise in food prices has raised the sceptre of a interest rate hike by the Reserve Bank of India.
But India Inc and analysts have been reiterating that monetary policy actions are ineffective to combat high food prices as the problem is to do with supply side constraints and an inefficient supply chain.
“We believe that a large part of the inflation is more driven by supply constraints as well as speculative hoarding and direct intervention to address these issues is needed to get a better handle on reducing the prices of essential commodities such as fruits and vegetables,” said Shanto Ghosh, principal economist, Deloitte in India.