May 16: Inflation dipped to 8.66 per cent due to decline in the prices of primary articles and non-food manufactured products. However, petrol price hike and expected hike in prices of diesel will put upward pressure on the inflation.
Economists expect the RBI to again hike interest rates in June to bring down inflation. The finance minister, Mr Pranab Mukherjee, said that he welcomed the substantial decline in core inflation along with drop in inflation for food articles. However, he added that these are not the kind of inflation figures that he is comfortable with. The finance minister said that there will be some impact on overall inflation due to the adjustment in the petrol prices effected by the oil marketing companies in the coming months. He said that the international scenario on commodity prices also does not appear good at present. “We will continue to monitor the situation and take necessary measures to address the inflationary pressures in the economy,” said the finance minister.
He said that it is also encouraging to see inflation in manufactured products moderating to 6.18 per cent after showing signs of hardening in the past couple of months. However, inflation in non-food articles is a continued source of concern. It remains elevated at over 27 per cent in April 2011, he added. The finance minister was of the view that sustained high non-food primary prices create cost-push inflationary conditions in the manufacturing sector. He added that though there are some signs of moderation in the inflation for manufactured products in April 2011, yet he is hopeful that the recent monetary policy announcements would help in addressing these concerns.