New Delhi: Inflation inched up to 11.91% for the week ended 5 July as compared to 11.89% in the previous week, and 4.61% in the corresponding week a year-ago.
The rise is mainly on account of higher prices of food items and petroleum products, which may prompt RBI to further tighten money supply in its quarterly review slated for 29 July.
The wholesale price index-based inflation rose moderately on account of higher prices of fruits, tea, maize, masoor, moong, coconut and imported edible oils.
Despite attempts made by the government to tame price rise, iron and steel and unregulated petroleum products like furnace oil, ATF, bitumen, light diesel oil and naptha too became expensive during the week.
However, the prices of cement remained stable, while vegetables and salt became cheaper during the week.
Rising inflation may force RBI to further hike short term interest rates as well as statutory deposit requirements when it reviews the credit policy later this month.
RBI had already increased repo rate and Cash Reserve Ratio (CRR) by 0.5% each to tame inflation on 24 June.
Finance Minister P Chidambaram on 17 July said that though there is pressure on prices, the steps taken by the RBI in the recent past have resulted in moderation of money supply.
“The tightening of money supply can be seen from escalating overnight interbank call money rates, which have gone up to 7-9.1% yesterday,” he noted.
The government too in the recent past had taken host of fiscal measures, including export curbs on various food items and ban on futures trading on some agri commodities, to tame price rise.