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March 16, 2007 14:43 IST
Inflation surged to 6.46 per cent during the week ended March 3, as against 6.10 a week ago as vegetables became costlier and so did cement, whose prices were hiked by manufacturers after the Budget.
Vegetable prices soared by seven per cent and cement became expensive by 4.4 per cent, showed the official data, the latest after the Budget, which imposed dual excise duties to rein in cement prices.
Some part of the rise in inflation could be because of base effect, since inflation stood at just 3.86 per cent in the corresponding week last year. Prices of fish-marine, maize, oil cakes, flour, fuel items, copra, bran oil, zinc and insulated cables moved up.
However, prices of fruits, tea, poultry chicken, urad, spices and condiments, polyester yarn and sugar moderated.
Cement manufacturers raised prices after the Budget hiked excise duty by Rs 200 from the earlier level of Rs 400 a tonne, if a bag of 50 kgs is sold higher than Rs 190 and reduced it by Rs 50 if it is sold less than Rs 190.
After days of reluctance, the manufacturers finally relented to hold the price line for a year, but said any cut would be possible only after duty cuts are announced. The inflation data could further add to the worries of the government, which, together with RBI, has announced a number of measures to rein in surging prices.
In fact, economic think tank Institute of Economic Growth has forecast inflation to remain above 6 per cent in three month period, to end at May 11, because of "hesitant" monetary steps taken by the RBI.
These three months are crucial politically as well since elections to Uttar Pradesh assembly are slated for April-May only.
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