Chidambaram says don't know if inflation peaked at current 8.10%

[N.Sukumar]

Chidambaram says don't know if inflation peaked at current 8.10%
Friday, May 30

NEW DELHI - The country's headline inflation rate, currently at a
44-month
high of 8.10%, may not have peaked, Finance Minister P. Chidambaram
said today.
"We don't know if we have peaked... There is no sign of any prices
declining... It will be very difficult to hazard any guess on
inflation,"
Chidambaram told reporters today.
"Monetary and fiscal measures will contain inflation, but
inflation at
8.1% is worrisome," the finance minister said.
The latest inflation number, as measured by the wholesale price
index, is
at 8.10% for the week ended May 17 as against 7.82% a week earlier.
Inflation has risen primarily on account of commodity prices, and
has been
rising sharply since the beginning of the current calendar.
Chidambaram said the spurt in inflation was a global phenomenon.
"Inflation will moderate over a period of time but that depends on
crude
oil prices," he said.
International crude oil prices had recorded an all-time high of a
little
over $135 a barrel earlier this month.
The headline inflation has stayed above 7% for the last 11 weeks.
Since April, the government has cut import duties and banned
export of key
items, while the Reserve Bank of India raised banks' cash reserve
ratio by 75
basis points to 8.25%, in a bid to rein in inflationary expectations.
The government has been claiming that the steps taken to tame
inflation
will bear fruit in the next two-to-three months.
The central bank is targeting an inflation rate of 5.5% by end
March.
"We will do our best to moderate, contain and reverse headline
inflation,"
Chidambaram said.
The finance minister said he was confident food prices would
moderate on
account of record production of wheat and rice this year, but was
sceptical
about prices of non-food prices.
"There is no sign of any prices (of non-food articles) declining.
Some
prices have to decline before headline inflation moderates," he said.
A hike, if any, in prices of auto and cooking fuels may also spur
inflation, he said.
"Any increase in administered prices (of fuels) will be
inflationary in
the short term," Chidambaram said.
The government is finalising a compensation package, which
includes price
hikes of fuels, to check under-realisations of state-run oil marketers
due to
crude oil spurt amid frozen retail rates.
Chidambaram repeated his appeal to cement companies, claiming
there was
room for a further price cuts.
"Yes I maintain cement prices can come down further. New capacity
has been
added, and there is no reason why prices should not come down," he
said.
Under pressure from the government, cement companies had cut
prices by 3-7
rupees per 50-kg bag in some states earlier this month. End
.