Tamil Nadu   

“Inflation may touch 13 p.c.”

CHENNAI: The recent surge in prices has both policymakers and the common man worried, but the current trends show that the rate of inflation may easily touch 13 per cent in the near future, D.K. Srivastava, director, Madras School of Economics, said on Tuesday.

Speaking at a seminar, ‘Hedging against Inflation,’ organised by the Southern India Chamber of Commerce and Industry (SICCI), he said the cause of the surge in prices was the fuel price hike, coupled with the increased money flow and the dependence on energy-intensive growth.

Though the food prices did increase in the last few months, Dr. Srivastava said the upsurge had a clear correlation with the increase in the prices of fuel and allied products, which went up from 7.86 per cent in the first week of June this year to 16.25 per cent.

C. R. Rajan, president-strategy, Murugappa Group, said external factors and monetary supply were crucial factors, but the neglect of agriculture had contributed to the inflation. Financial institutions were turning to commodity markets to recoup the losses incurred in other markets, sparking speculation.

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