The annual inflation was at 7.83% for the week ended May 03 versus 7.61% the previous week. The data for the week ended March 8 has been revised to 7.78% versus 5.92% (provisional). The markets seem to have discounted the inflation figures. The food articles index was up at 0.5% whereas the manufacturing products index was up by 0.3%. Fuel, power index was up by 0.8%. “The benefits of the fiscal measures like excise and import duty cuts have been negated by currency depreciation. Rise in food prices has also been a contributor”, says HDFC chief economist Abheek Baruah. FY-08 subsidy burden seen over Rs 20,000 cr versus Rs 17,000 crore. The wholesale price index is forecast to have risen 7.5 per cent in the 12 months to May 3, below 7.61 per cent a week earlier that was its highest since November 13, 2004. It will be the ninth consecutive week that inflation has held above 5.5 per cent, the central bank's target for inflation by the end of the fiscal year ending in March 2009.
The government, under pressure to contain prices ahead of state polls this year and national elections due by next year, has cut import duties on edible oil, curbed rice exports and forced steel and cement companies to cut prices. Policymakers have also signalled their intent to take more steps to tame inflation if needed. In April, the RBI raised the proportion of deposits that banks must set aside by 75 basis points to a seven-year high of 8.25 per cent, to suck out inflation-fuelling excess cash from the banking system. The wholesale price index is more closely watched than the consumer price index (CPI) because it includes more products and is also published weekly.
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