New Delhi: Global investment banker Barclays Capital has projected that inflation may surge to 17% by September on back of another round of hike in fuel prices in the same month.
“We believe WPI inflation will remain in double-digit territory until May 2009. We expect WPI inflation of 17% by September 2008,” the report said.
For the week-ended June 28, wholesale prices-based inflation touched a new 13-year high of 11.89% much higher than the Reserve Bank’s tolerance limit of 5.5% for the current fiscal.
According to the report, the government is likely to hike fuel prices between 10% and 20% again as early as September to limit fiscal risks.
Rise in the price of the Indian crude oil basket to $145-150 per barrel from the current $132 per barrel could be the trigger for another round of increase in fuel prices, it said.
The government last revised retail petroleum prices with effect from 5 June, when petrol prices was increased by Rs5 a litre, diesel by Rs3 per litre and cooking gas by Rs50 per cylinder.
This resulted in inflation touching a double digit figure of 11.05% for the week ended 7 June.
Last week, even Finance Minister P Chidambaram’s adviser Shubhashis Gangopadhyay predicted that double digit inflation will continue throughout the year 2008 and could impact the economic growth negatively.