20/03/2008 (Domain-b), Mumbai - The government has decided to slash import duties on edible oils, as it seeks to moderate inflation, which rose to an 11-month high of 5.92 per cent for the week ended March 8.
The government is expected to cut effective duties on palm oil to bring them down to 10 per cent in the wake of an over 30 per cent increase in the retail prices of majority of cooking oils, a senior official said.
The government is also expected to reduce import duty on soyabean oil, he added.
"The decision has been taken and the notification on the duty cuts can come any day," the official said.
While the government levies customs duties at 45 per cent on palm oil and 40 per cent on soyabean oil, a lower base price at July 2006 level has helped keep the effective duty rates on imported edible oils lower than the official ones.
The government had also announced a ban on export of all edible oils with effect from March 17, for one year to curb rising prices.
The annual rate of inflation based on the wholesale price index rose 0.81 per cent to 5.92 per cent during the week ended March 8, as prices of food items and metals soared in line with the global trend.
During the week, prices of base metal, alloys and metal products group rose by 6.7 per cent. Prices of blooms and billets and slabs went up by 30 per cent, wires of all kinds by 25 per cent, steel and tensile plates by 20 per cent and bars and rods by three per cent.
Among food products, prices of Arhar, gram and Moong went up by three per cent while fruits and vegetables, maize, and condiments and spices were expensive by one per cent.
Manufactured products like imported edible oil, coconut oil, and mustard oil, also turned dearer.
With inflation just short of six per cent mark, the Reserve Bank is unlikely to cut interest rates despite sluggish industrial growth, analysts said.
Former governor of the Reserve Bank and chairman of the Prime Minister`s Economic Advisory Council C Rangarajan had yesterday said that the current inflation rate does not favour a low interest rates policy.
Inflation seems to be rearing its head everywhere. In China, inflation hit a near-12-year high at 8.7 per cent in February, while Hong Kong has registered the fastest pace in the rate of price rise since 1977.