P. Chidambaram with Jaswant Singh in New Delhi on Thursday. A Telegraph picture
New Delhi, July 31: Inflation inched closer towards the 12-per-cent-mark, rising to 11.98 per cent for the week ended July 19, almost the highest in 14 years.
A finance ministry statement said the rise was marginal and inflation on a week-to-week basis continues to be stable.
Analysts said the high rate of inflation justified the harsh monetary stance of the Reserve Bank of India announced a couple of days back. The central bank had raised the repo rate and the cash reserve ratio to 9 per cent each.
The rate hike drew flak from industry which felt the tightening of money supply would have a negative impact on business confidence as companies may postpone their expansion plans.
However, the government welcomed the RBIs move to tame inflation as price rise would be a major issue in the state elections this winter and the general elections next year.
The message is clear that (controlling) inflation will dominate over growth, said Sonal Varma of Lehman Brothers Inc.
Data on wholesale prices released by the commerce ministry today showed a 0.1 per cent increase in the prices of primary articles, including food articles, for the week under review.
The inflation rate for manufactured items rose to 10.82 per cent for the week ended July 19 compared with 10.72 per cent the previous week, the report showed.
Meanwhile, steel minister Ram Vilas Paswan has asked state-run Steel Authority of India Ltd to hold the price line and try and persuade other steel companies to do the same.
The minister said, There was no point for the companies to increase the prices if they have been able to make 15 to 20 per cent profit despite the increase in raw material costs and holding the price line for about three months.