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India On Media |
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| Money
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| Inflation rises to two-year high |
| Food prices have shot up across the country and it is showing up in the latest inflation numbers
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| INDIA
, 9-February-2007
9:42:43 AM |
| Food price inflation for the week ending January 27 was nearly 10 per cent compared to a little over nine per cent in the previous week.
While manufactured product prices have risen by over six per cent compared to about five and a half per cent the previous week.
Overall inflation has gone up by over six and half per cent compared to a little over six per cent the week before that. However, prices of the things that we buy have been rising for quite some time now.
The dramatic jump in the inflation figure is partly an effect of statistics, as the base for this week was a bit lower.
Price index
If one looks at the absolute price index, then the difference between this week and the previous is significant only in the case of food articles.
For the week ended January 20, all commodities stood at 208.5, food articles at 214.6 and manufactured goods at 181.4.
While for the week ended January 27, all commodities stand at 208.8, food articles at 216.1 and manufactured goods at 181.4.
In fact, if we compare it to the price index four months ago, then most things are actually cheaper. For the week ended October 28, 2006, all commodities stood at 208.9, food articles at 217.2 and manufactured goods at 180.6.
Managing inflation
No wonder, the Finance Minister is able to present a brave face saying that he is going to manage inflation as he has in the past.
"The reason is demand, which is very high. But there are supply constraints. But, as supplies improve this strain will ease. There has been high inflation in the past, and we have moderated it. This inflation also we will moderate," said P Chidambaram, Finance Minister.
The excessive demand is a direct consequence of the nine per cent plus growth in the economy. The rapid economic growth has led to an excess of money in the system and that is fuelling demand and in turn stroking prices.
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