Indian inflation close to 13-year high

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Mumbai, June 3 (Reuters): India's annual inflation rate is probably already near 9 per cent, close to a 13-year high, and will top the central bank's comfort zone all year as the impact of rising raw materials prices seeps deeper into the economy.

But since price pressures are largely beyond its control, the central bank will maintain a measured response to fight inflation by managing cash levels in the banking system rather than raising interest rates, which could impact growth, economists said.

A potential rise in pump prices to offset pressure on government subsidies, plus tax cuts and higher federal government salaries that could fuel demand, are expected to keep pressure on inflation in coming months.