Date:07/08/2004 URL: http://www.thehindubusinessline.com/2004/08/07/stories/2004080702860600.htm

Back Inflationary trend temporary: FICCI

Our Bureau

New Delhi , Aug. 6

WITH regard to the rising inflation rate that crossed 7.51 per cent on Friday, the Federation of Indian Chambers of Commerce and Industry (FICCI) observed that this is more likely a temporary phenomenon.

The continued weakness in the monsoons in the latter half of July this year had an impact on the prices of vegetables and foodgrains and has pushed the inflation to 7.51 per cent, the chamber said.

It felt that the real threat to the overall inflationary situation is from oil prices, which continue to rule high in the international markets. Further, the chamber observed that the slower growth of money supply in the current year - 4.3 per cent till early July as compared to 5.4 per cent in the corresponding period of the previous year - would help contain inflation rates in the medium term.

"It is notable that the food supply chain has been disturbed first by drought and now by the floods. As a result, the current trends may last another week or two. Primary goods prices have steadily risen since the first week of July mainly fuelled by the food prices," the chamber said.