The Telegraph
Friday , January 11 , 2013
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Inflation to be sticky

Calcutta, Jan. 10: Inflation is likely to stay above the 7-per-cent-mark by the end of this fiscal because of the adjustment in the administered prices of diesel planned by the government, C. Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said here today.

According to him, inflation had cooled down from 10.9 per cent in April 2010 to 7.2 per cent in November 2012 and was expected to go below 7 per cent by the end of this fiscal.

But, the possibility of the government raising administered fuel prices, particularly diesel, might arrest the moderation of inflation in the short run.

“Some adjustments are being made in administered prices (of fuel),” he said.

“They may come in the way of headline inflation coming down,” Rangarajan said at a conference organised by the Indian Institute of Foreign Trade here today.

However, Rangarajan defended the government move to raise fuel prices .

“Prices (of diesel) need to be adjusted because they are not in line with international crude prices. We have already made some adjustments. But some more needs to be done,” he said.

Rangarajan felt the impact of the reform measures that the Centre had recently undertaken would boost investor confidence.