Inflation because of few commodities

Under attack for unabated rise in inflation, the government on Tuesday said extreme price rise was limited to a few commodities like milk, cotton and iron and steel, besides petroleum, and not across-the-board.

"Government is taking measures to moderate inflationary pressures," an official statement said, adding that prices of 206 commodities have either remained stable or declined between January 5, 2008 to July 14, when inflation touched a 13-year high of 11.42 per cent.

Pointing out that inflation is largely commodity centric, the statement said 60 per cent of increase in inflation in the primary articles category was contributed by five commodities -- iron ore, cotton, milk, sea fish and oranges.

Among the manufactured goods, 60 per cent of the increase has been on account of eight products, six of which belong to iron and steel category, the Government said.

As regards the fuel group, the rise has been due to increase in prices of petrol, diesel and cooking gas and also those items whose prices are not fixed by the government like ATF, light diesel oil and naphtha.

Among the 30 essential commodities, the statement said, bajra, moong, urad, potatoes, onions and fish inland witnessed a decline in inflation.

The Government also pointed out that consumer price- based inflation for goods used by industrial workers have declined from 7.81 per cent in April to 7.75 per cent in May.

Government and RBI have already taken a host of fiscal and monetary measures to contain price rise over for the past three months. It has banned export of non-basmati rice, extended ban on pulses by a year, and imposed restrictions on export of steel iron and steel.

RBI, meanwhile, has increased the short-term lending rates and mandatory deposits of banks with the central bank to absorb liquidity.