JOIN USRising fuel and commodity prices worldwide had its impact on India’s wholesale inflation which soared two-and-a-half year high of 5.25% in January but the government was confident that the country can manage an upsurge up to $65 per barrel in crude prices.
Prices in fuel and power segment went up 18.14% in January. The increase was fastest since October 2008. Last month, fuel segment had spiked only 8.65%.
Global crude prices have been on increase since November last year but rupee has weakened in as many months putting a pressure on India’s import of crude oil. India is net importer of crude oil and gets shipped 80% of its consumption requirement from abroad.
Inflation for manufactured items too increased marginally due to higher prices of metal products, iron and steel and edible oils, among others, the government data showed.
Food inflation, however, showed a contraction for the second consecutive month.
Vegetable prices too abated. Food inflation saw a dip in consumer price index released on Tuesday. “The industrial economy is still weak and there is a need to improve the flow of credit to the manufacturing and infrastructure sectors. We also need to see a further reduction in the lending rates by banks and we hope that the RBI’s guidance on this to the banks will be followed up in the form of further reduction in rates for companies.
While retail loans at an affordable price will help boost consumption, there is an equal need to prop up the industrial sector through easy finance,” industry chamber Ficci said.