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| World Home » Business » | Thu. Aug 28, 2008 |
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Oil fuels inflation to 11.05 per cent MIL/BS Reporter, Jun 21, 2008. New Delhi/Mumbai: June 21, 2008 - Companies and consumers can expect another round of monetary tightening and administrative measures as headline inflation based on the wholesale price index crossed double digits to touch 11.05 per cent for the week ended June 7, the highest since May 6, 1995. The inflation numbers spooked the stock markets, with the benchmark Sensitive Index dropping to its lowest in almost 10 months. The Sensex fell 516.70 points, or 3.4 per cent, to 14,571.29, its lowest since August 24. All but one stock in the index fell. The 13-year high beat all analysts' — and the government's — expectations by almost 100 basis points and reflected the impact of the June 4 increase in auto and cooking fuels. Petrol prices were raised by Rs 5 per litre, diesel by Rs 3 per litre and LPG by Rs 50 per cylinder after the basket of crude oil that Indian refineries buy touched $125 per barrel. The inflation rate stood at 8.75 per cent in the previous week and 4.28 per cent in the corresponding week the previous year. "Ninety-four per cent of the weekly jump is on account of fuel," Finance Minister P Chidambaram said in a brief statement outside his North Block office this afternoon. "Inflation for the current week also captured rupee depreciation making imports dearer," said Dharmakirti Joshi, principal economist, Crisil. "This is indeed a very difficult time," Chidambaram said, adding: "We will have to look at stronger measures on the demand side and the monetary side." The government has already taken several fiscal and administrative measures like banning the export of some food items and cement, cutting import duties, banning futures trading in some items, and reducing customs and excise on petroleum products to curb the price rise. Analysts and companies expect the inflation rate to stay above 10 per cent in the weeks ahead as the fuel price rise works its way through the system. More
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