New Delhi: Inflation accelerated to a three-month high as the prices of fruits, vegetables and oil products increased, the government said.
Wholesale prices rose 3.75% in the week ended 1 December from a year earlier, faster than the previous week’s 3.01% gain, the ministry of commerce and industry said on Friday. That was the highest since 3.94% in the week ended 25 August.
Inflation rose due to the statistical impact of a drop in prices in the corresponding week last year, said Dharmakirti Joshi, an economist at Mumbai-based Crisil Ltd, the local unit of Standard and Poor’s. Inflation slowed to 5.36% in the week ended 2 December 2006, from 5.55% in the preceding week.
The Reserve Bank of India (RBI) wants to keep inflation within 5% by the end of the fiscal year. Still, price pressures may be reignited if the government increases retail prices for automobile and domestic cooking fuels following the rise of crude oil costs, according to economists. RBI is scheduled to meet next month to review interest rates.
“Pressure on inflation remains due to expectations of an increase in retail fuel prices in January,” said Rajeev Malik, senior economist at JPMorgan Chase and Co. in Singapore.
“We are expecting a 5% increase in oil prices in January,” Malik said.
The index of fuel products, which contributes 14.23% to inflation, rose 0.8% in the week ended 1 December, while manufactured products, with 63.75% weight, rose 0.1%.
Indian Oil Corp., the nation’s biggest refiner, and its state-run counterparts raised jet fuel prices for the ninth time earlier this month by about Rs6,200 a kl to Rs49,061.13 in Mumbai, home to the nation’s busiest airport, the refiner said on its website.