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Inflation rises to 11.63%, may force RBI to hike rates

Inflation rises to 11.63%, may force RBI to hike rates
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First Published: Fri, Jul 04 2008. 01 33 PM IST
Updated: Fri, Jul 04 2008. 01 33 PM IST
PTI
New Delhi: Driven by higher prices of fruits and vegetable, cereals and some manufactured items such as iron and steel and edible oil, inflation grew to a new 13-year high of 11.63%.
During the week ending 21 June, inflation moved up by 0.21% from 11.42% in the previous week and 4.32% in the corresponding week a year ago.
The wholesale price index-based inflation inched up on account of higher prices of unrefined oil that soared by 8%, tea by 4%, fruits and vegetable, sea fish, maize and bajra by 2% each.
At the same time, pulses, including urad and moong and spices became expensive by 1% each.
Despite attempts made by the government to tame price rise, items like iron and steel, edible oils and cement became costlier during the week.
Galloping inflation may force RBI to further hike short-term lending rate to banks as well as statutory deposit requirements when it reviews the credit policy on 29 July.
To anchor inflation, the central bank is likely to increase the repo rate a further 25 basis points and CRR another 50 basis points during the month, Crisil Principal Economist D K Joshi told PTI.
RBI has already increased repo rate and CRR by 0.5% each to tame inflation on 24 June.
According to Goldman Sachs, the apex bank is expected to hike another 100 basis points through a combination of raising the repo rate, 50 basis points compared to the earlier expectation of 25 basis points and the CRR by 50 basis points over the next 3 months, with risks towards more tightening.
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First Published: Fri, Jul 04 2008. 01 33 PM IST
More Topics: Inflation | RBI | Repo rate | CRR | Credit Policy |