Inflation rises to 3.79%; may hamper rate cut

Inflation rises to 3.79%; may hamper rate cut
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First Published: Fri, Jan 18 2008. 04 28 PM IST
Updated: Fri, Jan 18 2008. 04 28 PM IST
PTI
New Delhi: Inflation rate grew by 3.79% in the first week of the new year, shrinking the possibility of RBI lowering interest rates in its January 29 policy review.
While inflation was way below the 6.37% recorded during the period a year ago, analysts expect RBI not to soften its monetary policy stance.
“RBI would not ease monetary policy. It is going to keep all the key rates unchanged in its upcoming review,” Abheek Barua, HDFC Bank chief economist told PTI here.
On 4 January, P Chidambaram, finance minister, had asked banks to reduce interest rates to spur consumption that would, in turn, help sustain rapid economic expansion.
The wholesale price index-based inflation rate for the week ended 5 January was 0.29% more than the figures for the previous week.
Although prices of essential food items like fruits and vegetables declined, some fuel items like coking coal and manufactured products became dearer during the week under review.
Fuels and lubricants like coking coal, non-coking coal, bitumen, furnace oil, light diesel oil and naphtha turned more expensive, but aviation turbine fuel declined.
The inflation rate is expected to shoot up once the government decides to hike petroleum prices, a decision on which is expected in a day or two.
The prime minister’s Economic Advisory Council projected inflation to go above 4%, if prices of petrol and diesel are raised.
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First Published: Fri, Jan 18 2008. 04 28 PM IST
More Topics: India | Inflation | interest | Rates | Finance Minister |