Inflation At 2-Year High Of 6.47 Per Cent

A jump in oil prices and a rising demand for manufactured products have pushed the rate of inflation to a two-year high for the week ended April 12, with the wholesale price index touching 6.47 per cent from 6.17 per cent in the previous week. The index stood at 1.37 per cent for the corresponding week last year.

The index for fuel, power, light and lubricants rose 0.7 per cent to 256.2 during the week ended April 12, from 254.4 a week earlier, mainly because of higher electricity prices.

The manufactured products index, which accounts for nearly 70 per cent of the wholesale price index, rose 0.4 per cent to 151.8 because prices of tea, oil cakes and some oils witnessed a rising trend.

The jump in oil prices due to the war in Iraq and a low base effect has caused inflation to cross the 6.0 per cent mark for the first time in two years.

According to analysts, last year's drought, the worst in 15 years, pushed up the prices of a number of farm products.

Analysts, however, said they expected domestic prices to ease in the coming months because fuel costs fell on the back of lower international crude prices. India has already lowered retail fuel prices by more than Rs 2 a litre in the past fortnight.

The economy is expected to grow 6.0-6.5 per cent in the current financial year, but analysts say the economic impact of the war in Iraq may cap expansion.