Inflation surge dims hopes of rate hike pause

Our Bureau Updated - March 08, 2018 at 09:36 PM.

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Food inflation surged sharply to its highest levels since mid-March, leaving little room for the RBI to soften its anti-inflationary stance despite moderating economic growth and indications of a global slowdown.

The annual Wholesale Price Index-based food inflation rose 9.9 per cent during the week ended July 30, sharply up from the previous week's annual level of 8.04 per cent. While this was largely on account of the base effect, products such as onions, fruits, vegetables and protein-based items too contributed to the surge. The rate of inflation in food items was recorded at 16.45 per cent in the last week of July 2010.

The RBI has already raised interest rates 11 times since March 2010 to tame headline inflation, which had surged to 9.44 per cent in June. Analysts expect headline inflation to remain above 9 per cent until October.

“A reversal in the RBI's monetary stance and focus on inflation management in the near term is unlikely, unless there is a sharp and sustained downtrend in commodity prices,” said Ms Aditi Nayar, an economist with ICRA. The RBI will meet on September 16 for its mid-quarter policy review.

Not acceptable: Pranab

Winding up the debate on the first batch of supplementary demands for grants in the Rajya Sabha, the Finance Minister, Mr Pranab Mukherjee, referring to the concerns on inflation, said, “If it is 9 per cent it is not acceptable. It (inflation) would have been ideal at 3.5 to 4 per cent ...even if we can keep it at 5-6 per cent (it will not be bad).”

> anil@thehindu.co.in

Published on August 11, 2011 07:36