The release of the Wholesale Price Index (WPI), which measures headline inflation, on Tuesday will be a key statistic that the Reserve Bank of India will consider ahead of its policy review meeting on 16 June. So far inflation, despite aggressive monetary signals from the apex bank, has remained stubbornly high. Analysts do not see any early reversal in the trend, especially given that the long-pending increase in diesel prices could soon be implemented. At the same time, the growing cost of capital is squeezing fresh investments and is now threatening the growth trajectory of the economy. Clearly, the debate on inflation versus growth is poised to get more contentious.
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