Inflation Rises to 9.78 Percent
Wednesday, 14 September 2011, 22:23 IST   |    1 Comments
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New Delhi; As India's inflation moved "perilously" closer to double digits in August, Finance Minister Pranab Mukherjee said Wednesday that it was a time of stress and the government and the central bank were working collectively to tackle the problem. The headline inflation, based on the Wholesale Price Index, rose to 9.78 percent in August as compared to 9.22 percent in the previous month and 8.87 percent in August 2010, official data showed Wednesday. "It is another bad news, inflation has gone up from 9.22 percent to 9.78 percent, perilously closer to the double digit figure," the finance minister told reporters. He said the government and the Reserve Bank of India were closely watching the situation and would collectively take measures to overcome the problem. "This is a time of stress not only in India but all over the world and we shall have to maintain our nerve and we shall have to think how we can overcome the problem," Mukherjee said. "The Reserve Bank of India is also watching the situation like the government of India and collectively it will be possible for us to tackle the problem," he added. The Reserve Bank of India has hiked its policy rates 11 times since March 2010 to curb inflation. However, despite an aggressive monetary tightening inflation has remained stubbornly high, near double-digit, much above the central bank's comfort level of four-five percent. Near double digit inflation gives rise to the possibility of another interest rate hike by the central bank. Analysts largely expect the RBI to hike key interest rates by at least another 25 basis points when it takes up a review of the monetary policy Friday. Aggressive monetary tightening has taken a toll on growth. India's GDP growth declined to 7.7 percent in the April-June 2011 period, the slowest in six quarters. India's industrial output slumped to 3.3 percent in July, the slowest in two years. According to data released by the ministry of commerce and industry, the primary articles index rose to 12.58 percent in August, while that for fuel and power went up to 12.84 percent. The index of manufactured products saw a rise of 7.79 percent, while food articles became dearer by 9.62 percent. The figures for June were also revised upwards to 9.51 percent from the earlier projected 9.44 percent.
Source: IANS
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