New Delhi, May 9: The government, which has been combating inflation on a war footing for the past few weeks, faced fresh pressure today as the latest wholesale price index (WPI)-based figure rose to a 42-month high of 7.61 per cent for the week ended April 26 against 7.57 per cent in the previous week. Rising prices of food and some manufactured products continued to do the damage. WPI-based inflation stood at 6.01 per cent in the corresponding week a year ago.

During the week, prices of tea jumped by 11 per cent, fruits and vegetables by 1 per cent, fish marine by 2 per cent, spices and cardamom by 3 per cent. However, prices of pulses declined by nearly 1 per cent. Prices of mustard oil and imported edible oil went expensive by 1 per cent and 4 per cent respectively. Among manufactured products, cement prices went up by 0.2 per cent, aluminium ingots by 6 per cent and other aluminium materials by 4 per cent. However, much to the respite of the government, iron and steel prices declined by 0.1 per cent during the week. After a meeting with the Prime Minister Manmohan Singh on May 7, steel companies decided to reduce prices of flat products by Rs 4,000 per tonne and those of rebars and structural steel by Rs 2,000 per tonne. The move is expected soften the prices of steel in the coming weeks.

Meanwhile, bankers discounted fears of any hardening in interest rates and said they expected both inflation as and select lending rates to ease over the next 2-3-months. “Inflation will certainly come down in the short term, perhaps in two-three months. The present high rate is mainly due to the base effect and high international prices,” HDFC managing director Keki Mistry said. Private sector Axis Bank’s CFO Partha Mukherjee said that the present high inflation “doesn’t send any dangerous signals to both, bankers and borrowers”.

“There is enough liquidity in the system and I do not think the high inflation will have any telling impact on the borrowers... I believe rates may come down in two-three months, when inflation is likely to ease to 6 per cent,” he said.