Reserve Bank of India (RBI) governor D Subbarao had strong message for everybody in its annual monetary policy review: brace yourself for a spell of high inflation, at least in the near term.
RBI pegged overall inflation rate for 2011-12 at 6% with an upward bias - often interpreted as meaning that the central bank believes the price rise will be higher than its projection.
"Inflation is expected to remain at an elevated level in the first half of the year due to expected pass-through of increase in international petroleum product prices to domestic prices and continued pass-through of high input prices into manufactured products," Subbarao said.
High food prices - they grew by 13.5% in 2010-11 - and commodity prices are fanning the prices of manufactured goods.
Core inflation or non-food manufactured goods inflation has picked up over the last three months from an average 5.0-5.5% between June-October, 2010 to more than 7% in March.
"The second-round effects of such increases on transport costs would create further upward pressure," said Samiran Chakraborty, regional head of research (India) at StanChart.
{{/usCountry}}"The second-round effects of such increases on transport costs would create further upward pressure," said Samiran Chakraborty, regional head of research (India) at StanChart.
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