New Delhi: The country’s inflation accelerated to a nine-month high as prices of fruits, vegetables and oilseeds rose, giving the central bank less room to reduce interest rates.
Wholesale prices climbed 5.02% in the week ended 23 February from a year earlier, faster than the previous week’s 4.89%, the ministry of commerce and industry said in New Delhi. A Bloomberg survey of 10 economists had forecast a 4.8% gain.
Finance minister P. Chidambaram had said on 4 March that the government may take more steps to curb inflation as the winter crop of wheat, rice and pulses was likely to slow this year.
The Reserve Bank of India (RBI) cited rising prices as the main factor when it held rates at a six-year high in January. “Rising energy and foodgrain prices are a real cause for concern for the government,” said Indranil Pan, chief economist at Kotak Mahindra Bank Ltd . “I expect the Reserve Bank will hold the rates in April policy.”
Bond yields held at the highest in more than a week after the report. The yield on the most-traded 7.99% note, due July 2017, rose 5 basis points to 7.59% as of 12.13pm in Mumbai, according to RBI’s trading system. Oil prices traded near an all-time high at $105.46 (Rs4,271) a barrel in after-hours electronic trading in New York.
Agricultural output grew 3.2% in the three months ended 31 December from a year earlier, after a revised 3.7% gain in the three months ended 30 September, the government said. That was the weakest pace in 11 quarters.?“It’s my intention to keep growth close to 9% and keep inflation close to 4%,” Chidambaram said.
The commerce ministry on Friday revised the inflation rate for the week ended 29 December to 3.83% from 3.5%. The government revises the inflation rate after a delay of two months on additional price data.