Friday, September 23 2005 16:15 Hrs (IST) - World Time -

New Delhi: Higher prices of petrol, diesel, fruits and vegetables burned holes in the pockets of consumers though inflation rose only slightly to 3.53 per cent in the second week of September from 3.16 per cent in previous week. Although the present level of inflation is much lower than 8.15 per cent recorded a year ago, prices may start going up due to seasonal factors, festival demands and snow-balling impact of higher transport costs on virtually all items after the recent hike in petrol and diesel prices.

While India Inc became more competitive, as reflected in lower prices of manufactured products, it alone may not be enough to absorb the higher prices of all kinds of fuels.

Global oil prices is still ruling high at over 66 dollar a barrel especially after Hurricane Katrina followed by her near cousin Hurricane Rita, and continues to pose a threat to domestic prices.

No wonder, Finance Minister P Chidambaram expressed his anguish at an investor forum in New York over the current trend in oil prices that was putting a strain on the exchequer and dampening growth prospects.

Terming the current global oil prices as 'outrageous', he admitted that India had 'no control' on it. The Government had to pass on 13 per cent of domestic fuel price rise to consumers, while kerosene and LPG continues to be heavily under-priced.

Finance Ministry and RBI have still hopes that average annual inflation to remain within 5-5.5 per cent in 2005-06.

Current trend shows a benign inflation even after 0.4 per cent rise in Wholesale Price Index to 196.4 points from 189.7 a year ago. The final inflation figure was revised upwards to 4.45 per cent from a provisional estimate of 4.18 per cent during July 16.