Inflation hits 13-yr high at 11.63%

By OUR CORRESPONDENT

New Delhi

June 4: There are no signs of stabilisation in the rising inflation. It has hit a new 13-year at 11.63 per cent for the week ended on June 21, raising expectations of another interest hike by the Reserve Bank of India.

This time, however, markets didn’t crash as has been the case earlier. "The inflation figures released were on the expected lines so market didn’t react negatively," said an analyst with Prabhudas Lilladher.

"The inflation at 11.63 per cent has sort of peaked and by the end of August we should start seeing a low rate of inflation," said Mr Shashank Bhide, a senior fellow at National Council of Applied Economic Rese-arch. "The increase in prices in the past is now building up in the prices of other products, leading to spurt in inflation," he said.

He said that by September the inflation should come down in the range of seven to eight per cent.

But Crisil principal economist, Mr D.K. Joshi, said that inflation is likely to remain in double digit for the whole of 2008. "This is due to high prices of crude and commodities like coal and some agricultural products like edible oil," he said.

Mr Joshi saw inflation peaking at 13 per cent in near term. He said that the inflation has been suppressed because the incre-ase in crude oil has been partially passed on and government may not be able to do it in future.

He said that RBI is likely to increase repo rate and CRR by 25 basis points. "There are chances that RBI may raise CRR by even more than 25 basis points," said Mr Joshi.

Mr Bhide said fuel price will have to be increased again if oil prices go up further or remain at $140 for some more time. It is the timing that will determine its impact on inflation.