Inflation will very soon be a whisker away from the level that Reserve Bank of India (RBI) is comfortable with. That’ll be final proof that the recent hawkishness of the central bank is very much justified.
Government data released on Friday shows another sharp spike in inflation. For the week ended 9 February, wholesale prices rose at an annual rate of 4.35% . That’s a six-month high and way above consensus forecasts.
The inflation momentum is unmistakable. The impact of the recent hike in fuel prices will kick in soon, and that will add to the inflation fire. The recent data makes the possibility of interest rate cuts in the near future seem more remote.
We have argued in these columns for many months that the inflation threat should not be taken lightly. That’s why we also support RBI’s caution.
Countries across the globe have seen their inflation rates soar. There is little reason to believe that India will be an exception.