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India joins the stgflation club - rising inflation a serious problem as Inflation rises to above 5 per cent
As inflation touched 5.01 per cent for the week ended August 26, the Government on Friday sought to play it down. But experts say as Indian economy slows down due to adverse budget deficit, high oil prices, extremely poor trade deficit and balance of payment situations, india may have already joined the stagflation club led by Europe and America.
According to media reports, The wholesale price-based inflation soared to 5.01 per cent during the week under review from 4.91 per cent in the previous week, as prices of essential items like fruits, pulses and vegetables rose.
Earlier this year, inflation had crossed five per cent mark in the week ended June 17 and June 24, standing at 5.22 per cent and 5.44 per cent, respectively.
In fact, the Government revised the final inflation figure for the week ended July 1 to 5.21 per cent from the provisional estimate of of 4.96 per.
Finance Minister P Chidambaram told reporters that though 5.01 per cent figure is technically above five per cent, this is not something to be alarmed about.
"It's our intention to keep it below five per cent. There has been some supply side disruptions of vegetables and fruits etc. There continues to be some pressure on wheat and pulses (as well)," he said.
He said the Ministry of Food and Consumer Affairs was best equipped to address issues of supply of wheat and pulses. "Given the difficulties on supply side for wheat and pulses, we will look at whatever steps to be taken to keep inflation below five per cent."
The Asian Development Bank on Wednesday said rising food prices and delays in fuel oil price adjustments are adding further to inflationary pressures in India.
BIZ/FINANCE ARTICLES
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