Search:



The Web

Rediff








 Latest Business news on mobile: sms BIZ to 7333

Home > Business > PTI > Report


Inflation will come down soon: FM

December 10, 2004 14:25 IST

Describing the spurt in the inflation rate as "petroflation", Finance Minister P Chidambaram on Friday said in the Lok Sabha that the recent hike was caused by the very high crude prices in the past few weeks and increase in the prices of steel and other metals.

Asserting that the wholesale price index inflation on a point-to-point basis stood at 6.5 per cent in 2004-05 as against a projected five per cent, he said that WPI inflation had remained at above seven per cent, including a high of 8.8 per cent, for 22 consecutive months during National Democratic Alliance rule in 2000-01.

Chidambaram said "The worst seems to be over now ... if oil prices moderated, WPI inflation will also moderate in the near future".

He said a major reason for inflation during the NDA rule was "rather poor liquidity management" with liquidity of money touching a growth rate of 16.6 and the United Progressive Alliance regime was now targeting to bring it down to 14.

RBI had indicated the excess liquidity had come down from Rs 81,000 crore (Rs 810 billion) in April this year when the UPA came to power to about Rs 68,000 crore (Rs 680 billion) on December 8.

This excess liquidity was on account of foreign capital inflows, he said adding RBI was taking a number of measures to reduce liquidity.

Asked whether high imports were also impacting on inflation, Chidambaram said import generally had a "restraining impact" on prices as it fills the gap between supply and demand.



© Copyright 2004 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.







Article Tools
Email this article
Top emailed links
Print this article
Write us a letter
Discuss this article



Related Stories


CMIE pegs inflation at 6.5%

Using forex has difficulties: PM



People Who Read This Also Read


Investors need to be cautious







Copyright © 2004 rediff.com India Limited. All Rights Reserved.