The wholesale price index-based inflation's unabated rise continued and worse, expected to show an uptrend for at least the next 5-6 months, according to experts. For the week-ended May 31, the annual rate of inflation stood at 8.75 per cent, the highest since February 2001 when it was 8.77 per cent. For the corresponding week last year, it was 5.09 per cent.
Economists, however, opine that inflation would touch 10 per cent in the next couple of weeks once the full impact of the fuel price hike starts reflecting in various sectors of the economy. "The direct impact of the fuel price hike could be to the tune of 90-100 basis points, which would push inflation up to 9.5-10 per cent. The indirect impact, that is, the consequent changes in prices of transportation, etc, could further push up the rate by about 50-60 basis points.
The rise in inflation for the week-ended May 31 was primarily driven by the rise in the WPI of primary or agricultural products, which rose by 0.9 per cent and manufactured goods, which rose by 0.7 per cent over the previous week. The WPI for fuel and fuel products remained unchanged at the previous week's level of 347.2. The impact of the hike in fuel prices last week will show up in figures to be released next week.
The upward revision of data too continued with the final inflation rate for the week-ended April 5 now standing at 7.71 per cent as against the provisional figure of 7.14 per cent. Considering that the final data is usually higher than the provisional figures, experts believe that the final estimate for this week would be somewhere in the range of 9.4-9.5 per cent. At times, the difference between the provisional estimate and the final figures has been as high as 1.5 per cent, they said.
Inflation, which is measured as the change in the wholesale price index, crossed the RBI's comfort zone of 5 per cent as early as February this year and has only accelerated since then. The central bank has maintained an aggressive monetary stance since then. It hiked the repo rate by 25 basis points earlier this week and had hiked the cash reserve ratio by 50 basis point last month. But monetary tightening measures are meant to target inflationary expectations rather than inflation itself and its results are likely to be seen over a period of five-six months.
Economists, however, opine that inflation would touch 10 per cent in the next couple of weeks once the full impact of the fuel price hike starts reflecting in various sectors of the economy. "The direct impact of the fuel price hike could be to the tune of 90-100 basis points, which would push inflation up to 9.5-10 per cent. The indirect impact, that is, the consequent changes in prices of transportation, etc, could further push up the rate by about 50-60 basis points.
The rise in inflation for the week-ended May 31 was primarily driven by the rise in the WPI of primary or agricultural products, which rose by 0.9 per cent and manufactured goods, which rose by 0.7 per cent over the previous week. The WPI for fuel and fuel products remained unchanged at the previous week's level of 347.2. The impact of the hike in fuel prices last week will show up in figures to be released next week.
The upward revision of data too continued with the final inflation rate for the week-ended April 5 now standing at 7.71 per cent as against the provisional figure of 7.14 per cent. Considering that the final data is usually higher than the provisional figures, experts believe that the final estimate for this week would be somewhere in the range of 9.4-9.5 per cent. At times, the difference between the provisional estimate and the final figures has been as high as 1.5 per cent, they said.
Inflation, which is measured as the change in the wholesale price index, crossed the RBI's comfort zone of 5 per cent as early as February this year and has only accelerated since then. The central bank has maintained an aggressive monetary stance since then. It hiked the repo rate by 25 basis points earlier this week and had hiked the cash reserve ratio by 50 basis point last month. But monetary tightening measures are meant to target inflationary expectations rather than inflation itself and its results are likely to be seen over a period of five-six months.
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