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Inflation Rate Inflation has registered a 13-year high of 11.05 per cent growth rate on Friday. It is the direct result of rise in the prices of petrol, diesel and cooking gas. The government is in its last year of power and the elections are nearing and Inflation has added more to the problems of the government. Government had to increase the prices of petrol, diesel and cooking gas because the prices of fuel in the international market had increased a lot. The Indian oil companies were left with very low cash flows and the normal fuel supply could have been affected because of their financial problems.

WPI Government had announced the hike in the prices of petrol, diesel and cooking gas on June 4 that put the pressure on the price line pushing the inflation to the height within the week though the Wholesale Price Index for food articles had actually declined 1.1 during the week. The Commerce and Industry minister released the latest provisional inflation data in New Delhi. He said that in the first week of June WPI for light diesel oil had gone up 21 per cent, LPG had gone up 20 percent, furnace oil 15 percent petrol 11 percent and high speed diesel 10 percent.

Possibilities Rise in oil prices in the International market fueled the spiraling inflation and there is a possibility that the global commodity and crude oil prices will ease by the October month of the year. It is said that Government’s and Reserve Bank’s monetary and fiscal measures will begin to impact inflation with a lagged effect. Good monsoon predictions are also a positive sign.

Effected

Rising prices have put a disastrous effect on the living standards of middle class and the poor. It is the poor for whom the life has become more difficult. Prices not of crude oil but all the essential commodities have risen. Rise in steel and cement prices has badly affected the construction industry. Though government policies are also responsible for it, inflation is a global phenomenon and the government is trying its best to insulate the poor.