AP Food inflation remained at enhanced level of 16.49 per cent despite moderation from 16.87 per cent in the previous month.
The inflation for the month of May shot up to 10.16 per cent, leading to expectations that the Reserve Bank of India may soon hike its policy rates.
Driven by stubbornly high food prices and an increase in prices of manufactured goods, the benchmark wholesale price index touched 10.16 per cent in May, sharply higher than 9.59 per cent in the previous month.
The inflation, as measured by the wholesale price index, saw a sharp jump as the all the major components of inflation saw a rise. On a month-on-month basis, the wholesale price index for primary articles, which includes food articles, rose 3.5 per cent while that for manufactured products index was up 1.2 per cent. The fuel group index was up 1.2 per cent.
The March inflation was revised upwards to 11.04 per cent from 9.9 per cent. Finance minister Pranab Mukherjee in the Budget 2010 had announced an increase in duties on petroleum products that led to a rise in petrol and diesel prices.
High industrial growth and double-digit inflation levels have led to analysts saying that the RBI may even go for a rate hike before its scheduled July review of monetary policy. Jahangir Aziz, chief economist for India at JP Morgan, said that the RBI might go for an intermediate rate hike before July given that the prices of manufactured prices have seen a continuous rise. He sees RBI hiking rates by 25 bps before its July review and another 25 bps in the July review.
But given the liquidity shortage in the system, the central bank may not resort to cash reserve ratio hike, he added.
An NDTV poll estimated inflation at 9.56 per cent for May.
During May, the manufactured products inflation stood at 6.41 per cent while food articles inflation remained at 16.49 per cent.
Source http://www.ndtv.com/news/business/inflation-in-double-digits-rate-hike-looks-imminent-31555.php
Driven by stubbornly high food prices and an increase in prices of manufactured goods, the benchmark wholesale price index touched 10.16 per cent in May, sharply higher than 9.59 per cent in the previous month.
The inflation, as measured by the wholesale price index, saw a sharp jump as the all the major components of inflation saw a rise. On a month-on-month basis, the wholesale price index for primary articles, which includes food articles, rose 3.5 per cent while that for manufactured products index was up 1.2 per cent. The fuel group index was up 1.2 per cent.
The March inflation was revised upwards to 11.04 per cent from 9.9 per cent. Finance minister Pranab Mukherjee in the Budget 2010 had announced an increase in duties on petroleum products that led to a rise in petrol and diesel prices.
High industrial growth and double-digit inflation levels have led to analysts saying that the RBI may even go for a rate hike before its scheduled July review of monetary policy. Jahangir Aziz, chief economist for India at JP Morgan, said that the RBI might go for an intermediate rate hike before July given that the prices of manufactured prices have seen a continuous rise. He sees RBI hiking rates by 25 bps before its July review and another 25 bps in the July review.
But given the liquidity shortage in the system, the central bank may not resort to cash reserve ratio hike, he added.
An NDTV poll estimated inflation at 9.56 per cent for May.
During May, the manufactured products inflation stood at 6.41 per cent while food articles inflation remained at 16.49 per cent.
Source http://www.ndtv.com/news/business/inflation-in-double-digits-rate-hike-looks-imminent-31555.php
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