The Hindu : Business : Marginal dip in inflation

Online edition of India's National Newspaper
Saturday, Aug 28, 2004

Business

Business

Marginal dip in inflation

By Alok Mukherjee

NEW DELHI, AUG. 27. After three consecutive weeks of increase, the inflation rate fell marginally to 7.94 per cent for the week ended August 14. The inflation rate was 7.96 per cent in the previous week.

But for two uncertain factors, there is expectation that the inflationary trend would moderate in the coming weeks. One, international crude oil prices continue to be high but domestic fuel prices may not need immediate change because of the duty reduction on petroleum products. The second uncertain factor is the truckers' strike that has started impacting essential commodity prices. Much now depends on how soon the agitation by the goods transport operators comes to an end. "As of now, the impact of the strike is marginal. But if it persists, it could have serious effect on the price front,'' one analyst pointed out.

At the same time, the Government too has taken some steps to check inflation. While the duty cut on petroleum products was the first measure, the reduction in import duty on steel has led to cut in prices by major steel producers. The reductions range from Rs. 500 to Rs. 2,000 a tonne. On the monetary side, the Government increased the kitty of the Market Stabilisation Fund to Rs. 80,000 crores which means the Reserve Bank of India would be able to suck up some liquidity from the money market.

However, analysts feel that the RBI could wait for some more time before introducing other monetary measures because inflation was cyclical and could taper off in the coming months. Still, the average inflation rate is expected to be near 6 per cent this fiscal.

Printer friendly page
Send this article to Friends by E-Mail

Business