Indian inflation up 4.27pc as vegetables prices soar

FE Team | Published: July 15, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

NEW DELHI, July 14 (PTI): Costlier food items such as vegetables pushed up inflation to 4.27 per cent for the week ended June 30, but analysts say the Reserve Bank is unlikely to raise borrowing costs as the price index was within limits.
Although the 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.
Inflation had risen 4.13 per cent in the previous week. The price index is still below the Reserve Bank of India's (RBI) projection of close to 5 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 July 31.
"Key interest rates will remain same... but RBI may take pre-emptive steps in its review to ensure inflation keeps within limits," HDFC chief economist Abheek Baruah told the news agency.
HDFC chairman Deepak Parekh had also said earlier this week that interest rates had peaked and were unlikely to increase further. But it was also unlikely the rates would come down, he had added.
During the week under review, vegetable prices soared 4.5 per cent. Prices of all food articles were up by 0.7 per cent with pulses like masur becoming costlier by 5 per cent, and jowar and fish-marine rising by 1 per cent each. Prices of condiments and spices went up by 2 per cent. However, prices of coarse grain, bajra declined 1 per cent.
Inflation for the week ended May 5, was revised to 5.74 per cent compared to the provisional figure of 5.44 per cent. This was done as Wholesale Price Index for the 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 USD 77 per barrel in recent days would also weigh heavily on policy makers' mind.
RBI Governor YV Reddy, in a speech in Moscow had also recently said: "The policy endeavour would be to contain inflation close to 5 per cent... assuming no further escalation in international crude prices and barring domestic or external shocks."