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Business News/ Home-page / ADB sees inflation above RBI target
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ADB sees inflation above RBI target

ADB sees inflation above RBI target

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New Delhi: India’s headline inflation will be well above the Reserve Bank of India’s (RBI) 6% target for the 2011 fiscal year, a top Asian Development Bank (ADB) official said on Wednesday.

ADB managing director general Rajat Nag told Reuters that the Manila-based multilateral lender expected wholesale price inflation to come in at 7.5% in the year to end-March 2011 compared with 10.55% in June, 2010.

The RBI raised interest rates more forcefully than expected on Tuesday to fight inflation that is on track to hit double digits for a sixth straight month, setting the stage for more policy tightening.

The RBI said on Tuesday that inflationary pressures had become generalised and demand side pressures were clearly evident as an economic recovery was firmly in place.

Despite an easing in food inflation, analysts expect price pressures to continue because of a government decision in June to raise fuel prices, sparking protests from opposition parties. Nag said: “7.5% is the primary, secondary and tertiary impact of the fuel price hike.

He also said India’s economy -- Asia’s third largest -- would likely grow at 8.2% in the current fiscal year, compared with the government’s forecast of 8.5%.

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Published: 28 Jul 2010, 04:09 PM IST
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