Fuelled by the sharp increase in fuel and cooking gas prices, the inflation shot to a 13-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.
But for the common man, it is an even bigger worry. With prices of all commodities going through the roof, people are finding it impossible to make two ends meet.
The central government’s decision to hike petrol prices by Rs 5 a litre, diesel by Rs 3 a litre and domestic cooking gas by Rs 50 a cylinder has led to the spurt in inflation.
And the government, despite its assurances, is finding it impossible to control runaway price rise. It is also proving to be a major challenge for both the finance ministry and the Reserve Bank of India.
Meanwhile, the Bombay Stock Exchange’s benchmark Sensex tumbled by over 345 points at midsession soon after the release of inflation rate, which rose to a 13-year high of 11.05 per cent.
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.
In India, the demand for crude oil is rising by 7 per cent, while imports are rising by over 9 per cent. The government hiked the prices of petrol, diesel and cooking gas by a huge margin on June 4. We’re paying more for petrol (and diesel, and LPG) — but does anyone know why? So, okay, oil prices have doubled in just over a year. Here’s why:
Speculative trading: Traders bet on future prices of oil through commodity exchanges. If there is a natural calamity, or if a country’s president or the boss of a global oil company makes a statement which could be linked to oil, the traders at the exchanges bet on a higher price in the future.
The record high price of nearly $140 per barrel is the July futures price of oil in the New York Mercantile Exchange.
Geo-political tensions, leading to supply disruptions: Caused by war, terrorist attacks or military warfare in oil rich countries, which could affect oil supply. The US sanctions on Libya, Iran and the war in Iraq have all affected oil prices.
Confronted with spiralling aviation turbine fuel prices, which account for half an airline’s operating costs in India, several low-cost and full-service carriers will go for a steep increase in fares that could vary from 5 to 20 per cent, from June 20.
The announcement comes three weeks after fares were raised 8 to 10 per cent following a rise in ATF prices (which increased 18 per cent last month).
Earlier this week, state governments had raised serious issues on the airlines’ request to lower sales tax, which could be as high as 30 per cent in some states, as a means of reducing cost.
Executives of low-cost carriers SpiceJet and IndiGo said they had increased fuel surcharge by Rs 300 for distances below 750 km and by Rs 550 for sectors over 750 km. The earlier surcharges stood at Rs 1,950 and Rs 2,250 for below 750-km and above 750-km sectors, respectively.
GoAir executives said they would take a decision on an increase in the fuel surcharge on Friday.
Jet Airways, the country’s largest airline, has increased basic fares instead of fuel surcharge, calibrating increases to distances.
Jet Airways CEO Wolfgang Prock Schauer said: “While the basic fare will increase 10 per cent, the overall increase in fare would not be more than 5 per cent since we have kept the fuel surcharge intact.”
For distances less than 750 km Jet Airways will have a minimum basic fare of Rs 1,000 and for sectors between 750 km and 1,000 km the minimum basic fare will be Rs 2,250.
For distances above 1,000 km the basic fare will be Rs 3,000. This is an increase anywhere between Rs 100 and Rs 1,000.
Jet Airways’ subsidiary value carrier JetLite, formerly Air Sahara, which was acquired last year, will have minimum fares of Rs 500 for distances below 750 km, Rs 1,500 for distances between 750 km and 1,000 km and Rs 2,000 for distances above 1,000 km. Its earlier minimum basic fare started from Rs 100. — Business Standard
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