It seems that rising prices will become a greater worry for government in the coming days than they are being perceived now. The inflation has already reached over 8% since March 2008, though the government’s latest data showed on Friday it is hovering around 7.82%.
The provisional figure released by the government revealed an inflation figure of 7.82% for the week ended May 10, 2008. But, according to the revised figure for the week ended March 15, the inflation has already touched 8.02%, which is highest in the last three-and-a-half year.
Chief economist of ICICI Securities A Prasanna said this figure indicates that inflation is around 8% and is likely to go further up if fuel prices are revised upwards. There used to be around 0.2 to 0.5 percentage points difference between the provisional and revised figures. While provisional figures are released after two weeks, revised figures come after two months.
But, since March 1, revised data is 1.5 percentage points higher that the provisional figure. The final figure of inflation for the week ended March 1 was 6.21 as against 5.11 indicated in the provisional figure. In the week ended March 15, the inflation figure is revised upward by 1.34 percentage points to 8.02%.
A senior government official said during this period the provisional figures could not capture price rise of iron ores and steel due to lack of data, which started coming from second week of March, andpushed up revised figures.
However, a senior analyst with a PSU bank said since the provisional inflation figure captured the price rise in minerals and metals since March 2008, the revised figure will continue to be at least half a percentage point higher than the provisional figures. Therefore, if the current inflation according to the provisional data is 7.82%, the revised figure would be in the range of 8.3%.
But any revision of fuel price will put further pressure on inflation. If the petrol price is revised by Rs 2 per litre and that of diesel by Rs 1.50 per litre, the inflation will rise by 0.5 percentage point. This will take the revised figure close to 9%. This will force government and RBI to take tough action to contain inflation, which may hit growth. "We are watching the situation carefully. We will take further measures if needed," FM P Chidambaram said on Friday. At the same time, petroleum secretary M S Srinivasan said that a fuel price hike was "inevitable".