NEW DELHI: True to Finance Minister P. Chidambaram's words, the point-to-point inflation soared to more than a two-year peak of 6.58 per cent for the week ended January 27, thanks mainly to the spiralling prices of food articles.

The various fiscal and monetary measures taken by the Centre appear to have failed to dent the inflationary spiral which surged further to its latest high from 6.11 per cent for the week ended January 20 this year.

During the same period of 2006, the inflation level was well under check at 4.04 per cent.

Although the effect of the monetary measures taken by the RBI by way of hiking the repo rate are likely to be reflected in the wholesale price index (WPI) data for later weeks, the new high in inflation has stirred up apprehensions that harsher measures to contain prices may be in the offing amid serious concern being expressed by political parties.

It was only on Thursday, after the Cabinet meeting, that Mr. Chidambaram conceded that even though the Centre was committed to "moderating" the price spiral through additional measures, it would take some time.

Asked whether the measures to contain inflation would be brought in before the budget, Mr. Chidambaram said: "[The] Government will take steps as and when required".

The public sector banks have already been told to hold the interest rate on housing loans at current levels.

With the rise in the prices of vegetables (0.7 per cent), eggs, meat and fish (1.4 per cent), milk (1.4 per cent) and fruits and oil seeds (1.7 per cent each), the net effect on the WPI was a 0.1 per cent rise to 208.8 from 208.5. Effectively, the inflation level has exceeded the six per cent mark compared to the 5.0-5.5 per cent band set by the RBI for the current fiscal.

Concerned over the runaway rise in prices, G.K. Chadha, member, Prime Minister's Economic Advisory Council, indicated that the Government was actively toying with the idea of reducing the tariff on non-cereal items. "You are going to hear something from the Finance Minister in his budget speech in this regard," he said.

A view in certain quarters is that the Government may be unable to rein in inflation through fiscal and monetary measures, as the rise in prices is more due to the supply constraints in agriculture.

The soaring inflation has evoked strong criticism from the Left parties as the Government has not paid heed to their suggestions advice on banning futures trade in food grains and cut in fuel prices to check the price spiral.

"The Government should take certain steps like banning futures trading in essential commodities, reducing the prices of petroleum products and cracking down on hoarders to check price rise," senior CPI(M) leader S. Ramachandran Pillai said.

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