New Delhi, friday 22 August 2008: Continuing its upward run, inflation reached 12.63 % for the week ended August 09. The figure has increased by 0.19 % from previous week’s 12.44 % which was a 16-year high according to the government data released on Thursday.

Reacting immediately after the release of the data, the government has said that the prices of essential goods have stabilized contrary to the data released, which shows increase in the prices of 30 essential commodities from 6.54 % to 6.74 %.

The official wholesale price index (WPI) released by the Ministry of Commerce and Industry showed an increase of 0.3 % in the index for food article, while that of textile group rose 1.6 %.

Non-metallic index products rose 0.3 %.

The increase in index for food articles was due to higher prices of masoor dal (3 %), tea, moong and gram (2 % each) and milk (1 %).

The index for manufactured products like mustard oil rose 0.2 % while that of rubber and plastic products by 0.2 %.

The index for non-food articles group like sunflower, raw rubber and cotton declined by 0.6 % and the index for chemical and chemical products like benzene declined by 0.1 %.

The ministry said the WPI for all commodities stood at 236.9 as compared to 236.1 (provisional) for the week ended June 14 and annual rate of inflation based on final index, calculated on point-to-point basis, stood at 11.8 % as compared to 11.42 %.

The Finance Ministry in a statement said inflation rate for 30 essential commodities stood at 6.74 % for the week ending Aug 9, compared to 6.54 % for the week before.

Earlier on Thursday, Planning Commission Deputy Chairman Montek Singh Ahluwalia said the problem of inflation was short term and would moderate in due course, as the government has taken several monetary and administrative measures to rein in inflation.

“Inflation will moderate. Let’s have patience,” Ahluwalia said.

Ahluwalia also brushed aside apprehensions that the government’s recent decision to hike employees’ salaries would have any adverse impact on the country’s economy.

“We will be able to deal with any implications (arising out of the salary hike),” he said.

The Prime minister’s Economic Advisory Council (EAC), in its “Economic Outlook Report 2008-09″, has predicted a 7.7 % economic growth in the current fiscal, as compared to 9.1 % last fiscal.

Former Reserve Bank of India (RBI) governor C Rangarajan, while releasing the EAC’s economic outlook report here Aug 13, said inflation would moderate to 8-9 % by March 2009.