Government statement on inflation

The Following is the statement of Department of Economic Affairs, Ministry of Finance on inflation issued here today:

"The WPI index for all commodities for the week ending June 21, 2008 has moved up from 236.1 from the previous week to 237.1. The rate of inflation stands at 11.63 per cent.

After the sharp rise in the previous two weeks, the index for the 'fuel, power and light' group has stabilised.

In the 'primary articles' group the annual inflation (point-to-point) has declined from 10.96 to 10.54 per cent. On a year-to-year basis, there is a decline in prices in a number of commodities including the following: urad, moong, onions, potatoes, garlic, sweet potatoes, fish-inland and eggs, and fruits such as sapota and pineapple. Compared to prices on April 1, 2008, there is a decline in prices also in the case of okra, gingerly seed, gram, soya bean, papaya, brinjal, barley, arhar, black pepper and castor seed.

In the 'manufactured products' group, the annual inflation (point-to-point) has increased from 9.74 to 10.28 per cent. However, on a year-to-year basis, there is a decline in prices in a number of commodities including the following: bagasse, zinc, tyre cord fabric, nickel alloy, fluorescent tube, alloy stainless steel, brass sheets, blended tea leaf, lead ingots, duplex board, MS/SS ingots, polyester staple fibre, unrefined oil, aluminium bars and rods, vitamin tablets, copper bars and rods, cotton grey, cotton yarn, polyester yarn, aluminium products, resins, GLS lamps, adhesives, bottles and canvas foot wear. Compared to prices on April 1, 2008, there is a decline in prices also in the case of steel ingots, gingerly oil, electrical equipment, decorative laminates, imported edible oil, sooji, soya bean oil, maida, safety matches, printing ink, sugar, aata, rape and mustard oil, map litho paper and salt.

30 Essential Commodities

There is considerable relief in the behaviour of prices of 30 essential commodities which include food grains, pulses, edible oils, vegetables, dairy products, tea, sugar, salt and a few other commodities including kerosene, soap, safety matches, dhotis and saris. For the week ending June 21, 2008, the annual rate of inflation is 5.89 per cent compared to 6.55 per cent in the previous week.

Conclusion

"While headline inflation is still high, it is because the main drivers of inflation continue to be petroleum products (as a result of high crude oil prices) and iron and steel products including iron ore."

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BSC/TK/AS/178-08