LD INFLATION TWO

Economists predict continually high food inflation could
spread to other items as well.

"Food inflation is spilling over to other areas. I expect
overall inflation to reach 8.5 per cent by March-end," said
HDFC Bank Economist Jyotinder Kaur.
RBI has projected inflation at 6.5 per cent by this
fiscal end.
Sahay said there could be some spike in prices of
commodities like steel and cement even though for December
both these prices had declined.
With the rising trend in food prices rubbing off on other
commodities as well, RBI is expected to squeeze money supply
in its January 29 monetary review to tame inflationary
expectations.
"I expect RBI to hike cash reserve ratio (cash
requirement of banks) by 50 basis points. The central bank
could also raise repo and reverse repo rates (short term
rates) by 25 basis points each," Crisil Principal Economist D
K Joshi said.
The government is yet to take a decision on freeing
petrol prices, which could lead to rise in petrol prices by
around Rs three a litre.
For December, petrol prices declined by over two per
cent.
However, food inflation eased a bit during the week ended
January 2, but pulses, potatoes and onions among other
essential commodities remained expensive. (more) PTI BSP
RBT


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