Inflation at 11.91%, govt says prices stabilising

Inflation for the week ended May 10 was revised upwards to 8.57 per cent from 7.82 per cent. On a week-on-week basis, the index rose marginally to 238.7 for the week ended July 5, from 238.1 in the previous week, prompting the finance ministry to say that inflation has stabilised.

The data, released here this evening after the stock markets closed for trading, show that the steep uptrend in the WPI has stalled after nearly eight weeks.

During the week ended July 5, prices rose for some fuel products like naphtha, light diesel oil, furnace oil and aviation turbine fuel. Prices of manufactured products like chemicals and iron and steel also rose over previous levels.

Reacting to the latest inflation numbers, the finance ministry said the annual inflation rate for the group of 30 essential commodities had also declined to 5.74 per cent, from 5.98 per cent for the week ended June 28.

"Prices of essential commodities, which include food grain, pulses, edible oils, vegetables, dairy products and some other commodities, including kerosene, soap and safety matches, have more or less stabilised," it added.

Finance Minister P Chidambaram said more measures might be taken to tame prices even as the steps taken by the Reserve Bank of India take effect.

Inflation is now at a 13-year high and experts believe that double-digit inflation is here to stay for some time.

"There is still pressure on prices. There are signs that monetary steps are taking effect. The M3 (money supply growth) is slowing down," Chidambaram told reporters here.

Asked if the government was considering more steps to contain inflation, Chidambaram said, "We will see."

Last month, the RBI increased its key lending rate by 75 basis points and hiked the banks' reserve requirements by 50 basis points to combat inflation. The RBI is scheduled to review monetary policy on July 29 and may tighten monetary policy again.

Citing a recent statement by RBI Governor YV Reddy, Chidambaram said inflation was expected to moderate over a period of time. "The RBI's assessment on inflation is fair and correct," he said.

Reddy, who met the Parliamentary Standing Committee on Finance early this week, had said that the situation was unlikely to improve dramatically soon.