Petro prices fuel inflation to over 11 per cent

Fuelled by the sharp increase in fuel and cooking gas prices, the inflation shot to a thirteen year high of over 11 per cent. Coupled with increase in petrol product prices, the food prices put the pressure on inflation that touched 11.05 per cent on week ending June 7, a development that could cause a major worry for the government.

Capturing the Central Government's decision to hike petrol prices by Rs five a liter, diesel by Rs 3 a liter and domestic cooking gas by Rs 50 a cylinder led to the spurt in inflation, management of which is proving a major challenge for both the finance ministry and the Reserve Bank.

Inflation was 8.75 per cent for the week ended May 31 mainly on account of rising food, vegetable and fruit prices.

Within a minute of release of the government data on price movement in the country, the sensitive Bombay Stock Exchange benchmark Sensex dipped by over 200 points, reflecting the concern of the investing community.