There may be no reprieve from inflation, which is ruling at 12.63 per cent, before the third week of November, as the government sees prices riding the base effect among other factors.

The base effect pertains to low inflation numbers a year ago, which makes even a small increase in the price index now appear much larger.

“Headline inflation continues to be a matter of concern. The point to be stressed is that the inflation rate for each group is measured on an annual point-to-point basis. Hence, it is largely influenced by the trend in the corresponding week of the previous year, which is the base year,” a statement issued by the Finance Ministry said.

Inflation which surged to 12.63 per cent as of August 9, should also be seen from the perspective that wholesale price index (WPI) declined from 4.39 per cent to 4.24 per cent in the year-ago period.

This trend of a declining WPI continued up to November 24, 2007, the statement said.

When asked whether it meant that inflation will moderate by that time, finance ministry sources said it will be so to the extent of the base effect.

The ministry said while high inflation continues to be a matter of concern and efforts are being made to address the problem through monetary steps as well as improving the supply side, it will be relevant to note that the rate of inflation for the 30 essential items stands currently at 6.74 per cent.

The statement also took note of former finance minister Yashwant Sinha's comment that "monetary measures will not help" in containing inflation.

Monetary measures are intended to address the issue of money supply and liquidity. Hence, they will help in moderating aggregate demand, the ministry said.