Metals push up Prices:

The government is exploring the possibility of a hike in the tax on Iron Ore export:

New Delhi: Metals blunted the government’s drive to rein in prices and pushed the rate of inflation up to 7.33 per cent for the week ended April 12 against 7.14 per cent in the previous week. However, a closer look at the inflation data reveals that recent policy steps have been able to put a lid on food prices. Firm metal prices can now prompt the government to take more stern measures. According to D. Joshi, chief economist of credit rating agency Crisil, “Steps taken by the government — such as importing edible oil, banning the export of grain and action against traders — seem to be paying off. “Food prices have remained unchanged and edible oil prices have started falling slightly, while fruits and vegetable prices rose by less than half a per cent,” Joshi said. Metal prices, especially that of iron ore, played the villain, and finance minister P. Chidambaram’s statement in the Lok Sabha today indicated that the government was unsure about when price pressures would subside. “Steps taken will take some time to have an impact on inflation. Every possible measure is being taken. We must be patient,” the finance minister said. To check metal and mineral prices, the government is exploring the possibility of a hike in the tax on iron ore export. An official said that besides the higher levy, the probe by the Monopolies & Restrictive Trade Practices Commission into the rigging of metal prices would end soon. The moves by coal companies to increase prices has been stalled by the government, which can control input costs of steel and power companies. The cabinet committee on prices is expected to decide on banning steel exports and slashing the customs duty on steel and zinc to zero. Last week, the Reserve Bank of India had hiked the cash reserve ratio — the fraction of deposits that banks must keep with the central bank — to bring down prices.