Average price of the Indian basket for international crude rose by 42.4 per cent during 2005-06 as compared to the previous year, leading to a sharp increase in merchandise import payment during the year, says RBI.
"Merchandise import payments rose sharply by 31.6 per cent, largely reflecting a growth of 47.3 per cent in petroleum, oil and lubricants imports during the period under review," the central bank said in its first quarterly review of the Annual Monetary Policy for 2006-07.
This is on back of a rise in average price for the Indian basket of crude from $38.9 a barrel in 2004-05 to $55.4 per barrel in 2005-06, it said.
Non oil import payments increased by 20.5 per cent with capital goods as key components, signifying the underlying strength of domestic industrial activity, the apex bank observed.
The average international price of the Indian crude basket increased from $60.1 per barrel in January-March 2006 to 67.3 per barrel in April-June, 2006, the report said, adding it rose to as high as $71.4 per barrel in July 2006 (up to July 21).
Fuel prices, which account for about 35 per cent of the increase in WPI, constitute a major risk to 'headline' inflation, the report said, adding domestic prices of petrol and diesel were increased by nearly 9 per cent and 6.5 per cent respectively in early June.
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