Date:08/09/2007 URL: http://www.thehindu.com/2007/09/08/stories/2007090856341700.htm

Business

FM cautions against rising crude prices

Special Correspondent

Inflation rate slumps to 3.79 per cent

NEW DELHI: Although happy over the rate of inflation declining to its 16-month low at 3.79 per cent for the week ended August 25,

Finance Minister P. Chidambaram on Friday expressed caution on the oil front while noting that the prices of essential commodities should fall further.

“It is a cause for happiness. It is a cause for concern…This shows good macro management. I have been saying whatever steps have been taken from time to time have yielded good dividends,” Mr. Chidambaram said.

However, there was need for caution on the oil front as international crude prices touched $74 a barrel. “Since crude oil prices are at $74 per barrel... so the outlook is of caution,” he told newspersons here.

As for a further decline in the prices of essentials, Mr Chidambaram pointed out that it could happen only if supplies are increased.

“That can only happen if the demand-supply mismatch is addressed. We have to address the supply-side issues of pulses, food, oilseed, and vegetables…ultimately, the homemaker’s concerns about prices of essential commodities needs to be addressed,” he said. During the week, cheaper food articles such as wheat, fruits, vegetables and maize, as also certain manufactured products brought the wholesale prices index-based inflation rate to 3.79 per cent. With this, the inflation rate has stayed below four per cent for the second consecutive when it was at 3.94 per cent and way lower than 5.27 per cent in the same week last year.