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Inflation pressure stays due commods, fuel: India

MUMBAI: India will continue to see inflationary pressures due to high global commodity prices, India's Finance Minist
Published May 21, 2011

indian economyMUMBAI: India will continue to see inflationary pressures due to high global commodity prices, India's Finance Minister said on Saturday.

"We are told that there could be pressure on commodity prices because of shortage in production of certain essential food items," Pranab Mukherjee said.

"When there is uncertainty in the global market particularly on those products for which we have to depend through imports. Naturally it would affect," he added.

The wholesale price index, the main gauge of prices in India, rose 8.66 percent annually in April and has been stubbornly high for months while the food price index rose 7.47 percent and the fuel price index climbed 12.11 percent in the year to May 7.

"By constantly adjusting the policy, both from the supply side and the demand side and by taking appropriate fiscal policies in tandem with the RBI, we are trying to achieve high growth and acceptable levels of inflation,"Mukherjee said. The Reserve Bank of India (RBI) raised interest rates in early May for the ninth time since March 2010, by a sharper-than-expected 50 basis points, and said fighting inflation was its priority, even at the expense of some short-term growth.

The RBI expects inflation to stay high in the first half of the fiscal year before easing, and ending the year at around 6 percent. (

Copyright Reuters, 2011

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