India’s inflation rate continued to defy gravity rising to 11.63 per cent raising concerns about a further hike in interest rates. The rate was up from 11.42 per cent in the previous week, and is the highest since the series began in 1995.
The latest price data for the week-ended June 21 came amidst rising crude oil prices that has breached an all time record of $146 on Thursday fanning concerns about further deterioration of price situation coupled with a slowdown in the broader economy.
“A big concern this year is the impact of higher oil prices on India’s twin deficits – fiscal and current account. A larger fiscal deficit is likely to result in additional government borrowing, raising long-term rates and crowding out private investment,” said Sonal Verma, an analyst with Lehmann Brothers.