By NNN-PTI
New Delhi : Initial euphoria generated by the soft budget and Sixth Pay Commission recommendations may soon skittle out, with inflation rate soaring to a 13 month high of 6.68 per cent and may even force RBI to raise interest rates next month to contain prices.
Inflation rate was 6.73 per cent on Feb 3, 2007 due to high prices of essential commodities including vegetables, edible oil, food items and also metals.
During the week ended March 15 this year, it touched 6.68 per cent, compared to 5.92 per cent a week ago. The rate was 6.56 per cent during the corresponding period last year.
After remaining close to 4 per cent for many months, wholesale price based inflation has begun moving upwards, and has raised concerns among political circles as well.
“Although inflation rate was expected to remain at above 6 per cent, but 6.68 per cent mark is shocking, which has been led by a surge in global commodity and food prices coupled with higher vegetable prices at home,” said HDFC Bank Chief Economist Abheek Baruah.
He said the government and the Reserve Bank would have to take fiscal and monetary measures to contain inflation, which could otherwise move beyond 7 per cent as well.
RBI is scheduled to announce its annual monetary policy on April 29, and decide on the benchmark interest rates keeping in view the rising inflation and the need to maintain high growth.
The prices of steel products have gone up by 4.4 per cent to 10.9 per cent within a week, while prices of vegetables moved up by 2.5 per cent, edible oil by 0.7 per cent within a week.