New Delhi: Higher prices of some manufactured and fuel items pushed the inflation up to 3.5 per cent for the week ended December 22 as compared to 3.45 per cent in the previous week.
The wholesale price based index stood at 5.78 per cent in the corresponding week a year ago.
Despite the marginal increase in the index, it remained well below RBI projection of close to 5 per cent for the current fiscal.
During the week, furnace oil got expensive by five per cent while bitumen and naptha rose by four per cent and three per cent respectively.
In the food article segment, prices of coffee and vegetable moved up, while gram, moong, urad and rice became cheaper.
Terming food prices as a cause of concern, Finance Minister P Chidambaram had said, "All other prices are under control. There have been occasional flare ups. Onion prices go up one day and come down another day. Edible oil goes up one day and comes down the other.”
"I am basically worried about the supply-demand mismatch. We have requested the ministries concerned to do a more rigorous and realistic assessment of supply and demand," he had said.
Chidambaram said he would be happy if there was a free inter-state movement of food articles. It would also help the cause if there were big retail chains for procurement and supplies, he added.
Analysts say the government would not find it easy to keep inflation at below four per cent due to rising oil and food prices in the international market.
Oil prices are likely to remain high in the coming days due to turbulence in the Middle East, and food prices would firm up due to drought in Australia.
"In the next three months, inflation is likely to go up and we expect it to be around 5 per cent for the current fiscal," Crisil Principal Economist D K Joshi said.
He said government may pass hike in fuel prices to consumers any time.
However, Petroleum Minister Murli Deora on Thursday said price hike is not the only solution for reducing the losses faced by public sector oil firms and other option were being discussed.
"A GoM on fuel prices will meet shortly and will consider the other options," he had said.
During the week, prices of manufactured items like bread and buns went up by 7 per cent, while butter and cottonseed oil rose by two per cent, and maida one per cent.
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