Rising food and vegetable prices pushed inflation to a seven-year high of 8.75 per cent, termed “worrying” by Finance Minister P Chidambaram, who pinned hopes on the upcoming conference called by the Saudi King to rein in zooming oil prices.

Inflation went 0.51 per cent up for the week ended May 31 from 8.24 per cent in the preceding week, raising fears of it going higher once the impact of increase in diesel, petrol and LPG prices is captured in the price movement data.

Though the government sounded confident of taming the price rise, economists expect inflation to soon hit the double digit mark, as data coming next week onwards would also take into account the hike in fuel prices announced on June 5.

Terming the high inflation as a “worrying” factor, Chidambaram told reporters in Sivaganga that the government was confident of bringing down the price rise.

Attributing the soaring inflation to the spiralling crude oil prices, the minister hoped that the conference called by the Saudi King Abdullah bin Abdulaziz to discuss the problem of zooming oil prices would bear fruits and rein in the petroleum prices.

Meanwhile, Planning Commission Deputy Chairman Montek Singh Ahluwalia said here that a good monsoon would help in controlling the prices of commodities.

“Today, inflation is on the rise and there is no denying that. It has become a major challenge for the government and we are taking all possible steps to control it,” he said.

Economists, however, projected that inflation could cross the 10 per cent mark in the coming weeks. “Once fuel price hike is reflected in the index, the rate may go up to 10 per cent,” HDFC Bank Chief Economist Abheek Barua said.

According to Petroleum Secretary M S Srinivasan, the hike could lead to about 0.5-0.6 per cent rise in inflation.

[source]