August inflation to be close to double-digit: Kaushik Basu | business | Hindustan Times
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August inflation to be close to double-digit: Kaushik Basu

business Updated: Aug 16, 2011 17:02 IST

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Inflation in August may touch the double digit mark, chief economic advisor Kaushik Basu said on Tuesday, adding that any reprieve from high prices was unlikely in coming months.

"By our calculation there are still a couple of more months of relatively same level of inflation (as in July). Infact, inflation could climb a little bit next month... it could be going to close to 10% inflation for the month of August," Basu told reporters.

His comments came after the headline inflation for July declined to an eight-month low of 9.22% as the rate of price rise in food articles and petro-products eased, though pressure remained on manufactured items.

Basu said that inflation would remain at an elevated level till December before showing any signs of moderation.

"By our calculation there are still a couple of more months of relatively same level of inflation," he said, adding, "...it will be roughly where we are, we are expecting, till December. After that we do expect some sharp decline in inflation".

RBI has been hiking interest rates in its bid to tame inflation since March 2010. The high interest rate regime, experts said, was hurting the industrial growth. However, the industrial growth (IIP) for June stood at a better-than-expected 8.8%.

When asked if the RBI is likely to further raise its key policy rates considering the IIP numbers, Basu said: "The IIP news was better news than what we had expected... But RBI will have to take a call."

Basu said that both the government and the RBI would work together and analyse the economic situation.

"We are expecting that we will get together and do an analysis of where we stand... otherwise the news is not good. On a couple of sectors we have done well," Basu said.

He cited good performance of exports and pick up in Foreign Direct Investments as positive factors.

"Exports have been doing well for several months and there is also some indication that FDI, after a year of not doing well, is actually picking up very very nicely," Basu said.