The demon of rising prices raises its ugly head again with inflation spurting to 4.27 per cent for week ended June 30 as compared to 4.13 per cent in the previous week thus putting pressure on the Reserve Bank of India (RBI) to further tighten the monetary policy.
The latest spurt in inflation, on declining mode for past 10 weeks after crossing more than 6 per cent early this year, was mainly due to increase in prices of food articles and some manufactured items. The wholesale price-based index stood at 5.21 per cent in the corresponding week a year ago.
Analysis of data shows that prices of fruit and vegetables, condiments and spices, masoor, khandsari, groundnut oil were up during the week. However, bajra and gur became cheaper. Analysts, however discounted that the Reserve Bank of India would raise borrowing costs as the price index was within limits.
Although wholesale prices-based inflation was lower than the year-ago level of 5.21 per cent, it rose for the second week in a row after rains across the country disrupted supply of vegetables and made them dearer.
Analysts said farmers were unable to go to fields because of rains, but once rains end supply would increase and prices would cool down.
Rate hike unlikely
Inflation had risen 4.13 per cent in the previous week. The price index is still below the RBI’s projection of close to five per cent for the current fiscal and within the target of 4-4.5 per cent in the medium term. Analysts said RBI was unlikely to increase interest rates in its quarterly credit policy review on July 31.
Inflation for week ended May 5, was revised to 5.74 per cent compared to provisional figure of 5.44 per cent. This was done as Wholesale Price Index for week stood at 212 points against the provisional figure of 211.4.
Analysts said the fact that international crude oil prices have risen to 11-month high of $77 per barrel in recent days would also weigh heavily on policy makers’ mind.