August 29, 2008

Minerals push Indian inflation rate to 7.33%

It is reported that a steep increase in mineral prices, including iron ore, led to the wholesale price index-based annual rate of inflation rising 7.33% in the week ended April 12th 2008 much higher than the 6.34% in the same week last year.

Iron ore prices rose by 54.77% while prices of other minerals rose 12.28% over the same period last year. On the whole, the minerals group in the index rose an annual 50%.

There is a strong sense of expectation that spike in iron ore prices may prompt the government to impose many measures shortly. An inter ministerial group had discussed the measure earlier this month, but a consensus could not be arrived then. The latest data increase the probability that the government will implement the measure aimed at discouraging iron ore exports, thereby augmenting domestic availability.