Food items costlier, Growth rate down approximately 9%

The election budget of the UPA government — could see Finance Minister P Chidambaram taking steps to arrest spiralling prices, especially of food and other essential commodities. The election budget of the UPA government — could see Finance Minister P Chidambaram taking steps to arrest spiralling prices, especially of food and other essential commodities.
Inflation grew to a 6month high of 4.35% for the week ended February 9-2008, as food items turned costlier. This is the third week in a row when inflation rate is higher than 4 per cent.

This, of course, is 200 basis points lower than the position prior to Budget 2007-08. Under pressure from allies, the government banned forward trading in wheat and rice and tweaked excise duty structure of cement to stem the price rise. Then, too, the rise was mainly on account of high food prices.
Latest data shows consumer price inflation has dropped from 7. 5 per cent to 5.5 per cent, still higher than primary price inflation. However, primary prices are rising again, and according to an Axis Bank study, CPI inflation is unlikely to come below 5 per cent in the near future. “The rise in the NCDEX Agri Spot index suggests that primary price levels will keep rising for some time, but we also think there will be some moderation around the time of the winter harvests.”
Last month, at the World Economic Forum in Davos, Chidambaram had said that keeping inflation rate low, not high growth, was a priority for the government. “Between inflation and growth, what hurts the poor most is the inflation. That is why we must keep inflation low and this means reasonably high rate of growth.”