Double digit inflation hits India

The rate of inflation in India has galloped to a 13-year high to 11.05 per cent for the week ended June 7, confounding the worst fears of the United Progressive Alliance Government as general elections loom. This has been caused mainly by the June 5 increases in fuel prices and its cascading effect on all food commodities and other manufactured items, such as consumer durable goods and steel.

The unexpected spurt in the wholesale price index-based inflation from 8.75 per cent in the previous week evoked sharp criticism from all political parties, including the UPA’s coalition partners and Left allies, of the government’s failure to hold the price line and sustain the benefits of high growth.

Reserve Bank of India data show that the last time inflation was in double digits was in April-May 1995 when it ruled above 11 per cent.