Inflation rises to over 9%, RBI may hike interest rates again

LD INFLATION
New Delhi, June 14 (PTI) Driven by rising prices of
fruits, milk, petrol and manufactured goods, headline
inflation surged past the 9 per cent mark in May, raising the
expectations of another hike in key policy rates by the
Reserve Bank later this week.
Inflation rose to 9.06 per cent in May from 8.66 per cent
in April, prompting Prime Minister's Economic Advisory Council
(PMEAC) Chairman C Rangarajan to describe the trend as
"upsetting" and pitch for tightening of the monetary policy by
the RBI to cool rising prices.
The central bank, which has raised key interest rates
nine times since March, 2010, to check rising prices, is
slated to conduct a mid-quarterly review of the monetary
policy on Thursday. The RBI would try to balance the need to
tame inflation and promote industrial growth, which has
slipped to 6.3 per cent in April from 13.1 per cent a year
ago.
"I think the inflation numbers are in a sense
upsetting... We need to address the issue of inflation even
more strongly. We need to use more monetary and fiscal policy
to contain inflation," C Rangarajan told reporters here.
According to Wholesale Price Index (WPI) data released by
the government today, several essential items, including rice,
fruits, petrol, edible oils, cotton textiles and iron and
steel products, became more expensive during May in comparison
to April.
Inflation, according to Planning Commission Deputy
Chairman Montek Singh Ahluwalia, "is a problem (but) we still
remain hopeful... It has gone up, which is not unexpected,
because the preliminary indications said it would go up." MORE
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