By NNN-PTI,
New Delhi : Inflation is bound to cross a 13- year high of nine per cent from the current level of 8.1 per cent, as a fallout of today’s sharp hike in petrol and diesel prices, economists said today.
“It (inflation) could cross 9 per cent in the near term owing to the hike in petrol and diesel prices,” HDFC Bank Chief Economist Abheek Barua told PTI.
Besides, the base effect is also not favourable as the inflation is being calculated at the lower base, he said. The base effect relates to inflation in the corresponding period of the previous year.
Petrol price was today hiked by Rs 5 per litre, diesel by Rs 3 a litre and cooking gas by Rs 50 a cylinder.
Inflation was over 9 per cent nearly 13 years back in September, 1995.
Petroleum Secretary M S Srinivasan said the hike could lead to an about 0.5-0.6 per cent rise in inflation rate.
Petrol and diesel prices, which have gone up by 11 per cent and 8.5 per cent respectively, will increase the inflation rate by about 0.3 per cent, while LPG cylinder would add 0.2-0.3 per cent to the rate.
Besides, there would be cascading effect of diesel price rise on commodities in due course of time by way of higher transportation cost, resulting in further pressure on inflationary expectations.
According to Crisil Principal Economist D K Joshi, headline inflation could definitely cross 9 per cent in the week to come when inflation data would capture the oil price hike.