New Delhi: Higher food prices pushed inflation up to 4.41%, but analysts expect the Reserve Bank not to raise rates when it reviews the monetary policy on July 31.
The inflation rate based on wholesale prices index (WPI), the key measure of cost of living, is still within the central bank’s medium-term target of 4-4.5% and annual target of five per cent for this fiscal.
The WPI-based numbers, the final set before next week’s rate review meeting, rose to 4.41% for the week ended July 14 against 4.27% the previous week on costlier food items including vegetables, cereals, foodgrains and condiments and spices. The annual rate of inflation was 4.62% in the corresponding week last year.
Among the primary articles, prices of vegetables rose sharply by 7% during the week, while those of cereals rose by 0.9%.
Though inflation figures will have a bearing on the measures to be announced by the RBI to regulate money supply, analysts said inflation is within control and there was little chance of the banking regulator going for a rate hike.
While announcing the monetary policy for FY’08 in April, the central bank had left all the three benchmark rates - repo, reverse repo and CRR - unchanged but indicated it may take a second look later.
However, Finance Minister P Chidambaram had indicated last week that high crude oil and food prices did not necessarily mean that monetary policy would be tightened further.
“We will keep a watch on food and commodity prices and monetary policy will be kept tight. It does not mean that monetary policy would be tighter,” he was quoted as saying in an interview.