Riding on the steam of recent sharp hike in prices of petrol, diesel and cooking gas, inflation has now skyrocketed to a 13 year high of 11.05%.

Driven largely by the government’s June 4th fuel price hike, inflation leapfrogged to 11.05% for the week ended 7 June from 8.75 % the preceding week, overshooting even the around 10% general expectation of experts.

The inflation spike made waves in the market as well as in political circles. The SENSEX tanked by 431 points to plunge below the 15,000 mark, reflecting the nervous sentiments of investors about the efficacy of the anti inflation measures being taken by the finance ministry and the Reserve Bank of India.

Mr P Chidambaram India’s finance minister blamed soaring global fuel prices for the price rise situation and said that petrol, diesel and LPG contributed to 94 % of latest inflation spurt. He said that “When the administered prices of petrol, diesel and LPG were increased, we had cautioned the Cabinet that inflation would touch double digit and that is what has happened. These are difficult times. The government is aware of difficulties. Naturally, we will have to look at stronger measures on demand and monetary sides. We will try to address them to best of our abilities.”