Inflation rises to 3.83 per cent
Inflation is still below Reserve Bank's forecast of close to 5 per cent for the fiscal, and bankers expect the central bank to soften its monetary policy stance when it comes up for review on January 29.business Updated: Jan 25, 2008 13:46 IST
Wholesale price index-based inflation rate grew by 3.83 per cent for the week ended January 12, as prices of manufactured goods and some food articles edged up.
Inflation is still below Reserve Bank's forecast of close to 5 per cent for the fiscal, and bankers expect the central bank to soften its monetary policy stance when it comes up for review on January 29.
"It is likely that the RBI would cut rate by 25 basis point in order to align rates with the global trend," HDFC Bank chief economist Abheek Barua told PTI in New Delhi.
Inflation rate for the week ended January 5 was 3.79 per cent and 6.15 per cent in the year-ago period.
CRR rate could be left unchanged, as there is enough liquidity in the system, Barua said, adding that further interest rate cut by the US Federal Reserve is not ruled out when it meets on January 30.
Finance Minister P Chidambaram on Thursday said in Davos: "Our interest rates are set in order to contain inflation but if (high interest rate) is a dampener to growth, we will respond through appropriate fiscal and monetary measures."
Admitting that there could be an indirect impact of the financial crisis in the US, he said the government was, however, not in favour of putting curbs on capital (inflow).
However, RBI Governor YV Reddy had said: "We will continue to be sensitive to that (high crude, food prices) as they are essential commodities which have very great impact on the inflationary expectations."
During the week, prices of maize and rice got expensive by 1 per cent, while gram, fish marine and jowar declined by 5 per cent, two per cent and one per cent respectively.