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TRC Shipping and Logistics Pvt. Ltd.,
197 (Old No.97) Thambu Chetty Street,
Mannady,
Chennai - 600001

Tel : +91 44 30400798
Fax: +91 44 25245231

Email : chozzhan@gmail.com


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Tuesday, January 11, 2011

Increased prices of luxury goods may keep inflation graph high

Even as inflation is climbing, prices of cars, tyres, CNG and consumer durables like refrigerators, washing machines and microwave ovens have risen in the last few days, with manufacturers citing increase in raw material costs. The hike in prices of these items has come about even as milk, onion, garlic and vegetables have become dearer recently. Food inflation has crossed 18 per cent.

The government says inflation will come down to six per cent by March. But the latest price revision of the manufactured goods may exert more pressure on the overall inflation which was 7.48 per cent for November, analysts say. In the wake of rising prices of steel and other raw materials, several consumer durables' manufacturers like LG and Whirlpool have jacked up prices by up to four per cent.

For motorists driving CNG vehicles here, the new year began with an increase in their fuel bill. CNG prices had been increased from Rs.27.75 to Rs.29 per kg. Cars too became costlier. While Tata Motors hiked prices by up to Rs.30,000.00 other auto firms like Mahindra & Mahindra, Hyundai and General Motors have announced their intention of follow suit. Some of the leading tyremakers have also raised prices. As regards food, onion prices after declining, have risen to Rs.45-60 per kg in different cities. Milk producers like Amul and Mother Dairy have also raised the retail price by up to Rs.2 per liter.

Given the increase in prices of both edible and non-edible products, containing overall inflation, measured by the wholesale price index (WPI) remains a big challenge for the government and the Reserve Bank of India (RBI). "Any complacency on the inflation front is unjustified because the food inflation may remain sticky. With higher government spending in the last quarter, demand may further go up and prevent the prices to come down." said Ficci Director General, Mr.Rajiv Kumar.

The Central Government expenditure rose by 15 per cent during the first three quarters to Rs.6.90 lakh crore from Rs.6.21 lakh crore earlier. The Government expenditure for 2010-11 has been lakh crore. The expenditure in the last quarter of this fiscal may cross Rs.4 lakh crore at a time when there is a cash crunch in the economy.

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