Fiscal-end may see inflation touch double digits

New Delhi, Dec 25 (PTI) India's inflation is likely to
touch 8 per cent by the end of this fiscal, with an increasing
risk that it may even reach double digits due to soaring
food prices.
Saying that "India has encountered the threat of
inflation much earlier than other countries," Religare Capital
Markets Economist and Vice President Jay Shankar added that
"our baseline WPI inflation number remains at 8 per cent, but
we do not rule out a double-digit print."
The wholesale price-based inflation (WPI) spiked to 4.78
per cent in November from 1.34 per cent in October. The index
of food articles, though, dropped by a moderate 1.30 per cent
for the week ended December 12 from 19.95 per cent a week ago
even though rates of essential items like potatoes and pulses
remained too high for comfort.
"Rising inflation levels, remains a policy challenge and
inflationary pressures are likely to result in monetary
tightening by the Reserve Bank of India," Shankar added.
Meanwhile, in its October policy review, the Reserve Bank
of India raised its inflation projection to 6.5 per cent with
an upward bias from 5 per cent at the end of fiscal 2009-10.
Giving details, Shankar said, the consumer price index
(CPI) is already at 12 per cent, while food inflation has been
treading in double digit since early July.
According to a research report by Religare Hichens
Harrison, India's CPI numbers are way ahead of Brazil, Russia,
India and China (BRIC) and the South Asian countries.
While India's CPI is at 11.7 per cent, Brazil's is at
4.3 per cent, Russia (10.7 per cent), China (-0.8 per cent),
Indonesia (2.8 per cent), Thailand (-1 per cent) and South
Korea (2.2 per cent), the report added.
In a separate report, research firm Dun and Bradstreet
had said WPI inflation would average around 6.40-6.60 per cent
for the month of December and may touch 8 per cent by the end
of the current financial year.
The main reasons behind the rise in inflation rates would
be the significant price rise of primary food articles,
besides, with the revival of global economy, the demand for
crude oil would increase, which in turn would lead to a major
rise in international oil prices, Dun and Bradstreet said.
"In view of rising prices of food articles and
manufactured products and the expected increase in the fuel
group inflation in the ensuing months, D&B has revised its
inflation forecast upwards to more than 7.5 per cent by the
end-March FY10 against the initial estimate of 6 per cent,"
Dun and Bradstreet had said.
Prices of primary food articles are likely to be a key
concern in the near future and the rise in international oil
prices, in turn, is expected to exert upward pressure on the
domestic prices of minerals oil. PTI DRR
ANU