Inflation up .. home loans up!

Even as last week’s marginal decline of 0.02 % triggered hopes of a gradual ease, inflation for the week ending July 19 hovered yet again around 12%. The rise in inflation rate is being mainly attributed to an overall increase in the price of primary articles and food products. As a result, various banks have immediately announced an increase in their rates of lending.

The exact inflation figure for week ended July 19 is 11.98%. For the week before that it was 11.89%. The figure for May 24 has also been revised to 8.9%. It has been rising unabatedly after petrol prices were increased by the Government on June 5.

Inflation stood at 4.65 % in the corresponding week a year ago.

The break up of the inflation is as follows:

# Fuel, power, light index remains unchanged

# Primary articles are up by 0.1%

# Cereals were costlier by 0.1% while Pulses saw a slight climbdown

# Basic metals and alloys are costlier by 0.1%

# Fruits and vegetables were slightly less expensive

# Edible oil is down by 0/.3% and Cotton textile is up by 0.2%

This is the first official data on inflation after the Reserve Bank increased the short-term lending (repo) rate by 50 basis points to 9 per cent and also raised the mandatory deposits (CRR) that banks have to park with it by 25 basis points to cool down the rate of price rise.

However, the exact effect of these measures will be known after some time only as official data is released with a two week lag and hike in CRR would come into effect only after August 30.