Inflation worries: FM asks nation to have faith

New Delhi: Inflation continued its upward march to reach 42-month high of 7.57 per cent for the week ended April 19 on account of higher prices of vegetables, food articles, steel and some fuel items.

Pointing out that the prices would come down and inflation would be under control, Finance Minister P Chidambaram said, "I have said that you must be patient, the steps which we have taken , fiscal steps, monitory steps will come together. You can't announce something on Friday and expect it to have an impact on Saturday. You must be patient.''

Chidambaram said that inflation will be tamed and food prices will come down sooner than other prices.

"The inflation will be tamed; food prices will come down sooner than other prices," he said.

The Government, he said, has already procured 154 lakh tonnes of wheat and 230 lakh tonnes of rice.

Meanwhile, the CPI has asked the Government to stop obsessing about fiscal prudence and take strong measures to rein in the rising prices.

The party said that despite claims, none of its fiscal or monetary measures taken so far have had an effect on the ground.

Economist Mahesh Vyas said, "The factors haven't changed. We had expected inflation to remain high for some time. The old factors of global commodities and food articles being high still hold true. so nothing has changed dramatically. but there is nothing to be alarmed with."

"The rising inflation has stopped rising further to the credit of the rbi and govt. Inflation has stabilised around 7.5 per cent or so. If efforts are taken too aggressively, it could lead to other complications. Better to understand that inflation will be high for some time before it starts coming down. two weeks have passed, I expect four weeks more to go after which it should start coming down."

However, despite the war unleashed by the Government and the RBI to check price rise, the wholesale price-based inflation rose 0.24 per cent points from 7.33 per cent in the previous week.

While the Government announced slew of measures sacrificing more than Rs 6,300 crore of revenue to contain inflation, RBI increased Cash Reserve Ratio in quick succession, mopping about Rs 27,500 crore from the banking system.

"Steps taken by the Government and the RBI would lead to easing of inflationary pressure in the future and (inflation) can come down to 5.5 per cent," Crisil Principle Economist D K Joshi told PTI.

Inflation, which was 6.07 per cent a year-ago, had last reached the high of 7.76 per cent for the week ended November 6, 2004.

Reserve Bank has revised its comfort band from last year's near 5 per cent to 5.5 per cent for the current fiscal on account of globally high commodity and oil prices.

"There are concerns that demand pressures, which have been reasonably contained so far are being coupled with supply-side factors, which if not temporary, could impact domestic inflation significantly," RBI had said.

"Inflationary pressures from international food and energy prices appear to have amplified and by current indications, are likely to remain so for some time," it added.

(With agency inputs)