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Inflation up at 4.27 pc, interest rate seen steady

The widely tracked wholesale price index rises 4.27 per cent in the 12 months to June 30, higher than the previous week's increase of 4.13 per cent, reports Gaurav Choudhury.
Hindustan Times | By Gaurav Choudhury, New Delhi
UPDATED ON JUL 13, 2007 09:07 PM IST

Rising food and manufactured product prices pushed India's annual wholesale inflation up more than expected in late June, but analysts still expect the central bank to keep interest rates steady at a July 31 policy review.

The widely tracked wholesale price index rose 4.27 per cent in the 12 months to June 30, higher than the previous week's increase of 4.13 per cent, data showed on Friday.

Policy makers expect moderate inflation in coming months as previous policy tightenings take effect. "There is no pressure on interest rates," said Saumitra Chaudhuri, an economic adviser at rating agency ICRA.

Annual inflation hit 6.69 per cent on January 27, its highest in more than two years, but softened as the central bank tightened policy and the government cut duties on a range of items. The Reserve Bank of India kept its short-term lending rate steady at its previous review in April, after raising it five times since last June.

Reserve Bank of India Governor YV Reddy called on Finance Minister P Chidambaram ahead earlier this week ahead of the quarterly monetary policy review on July 31.

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