The Hindu Business Line : Inflation hits 42-week high of 7.57%

New Delhi, May 2 Inflation rose to a 42-week high of 7.57 per cent in the 12 months to April 19, higher than the previous week’s annual rise of 7.33 per cent, largely on account of an increase in food, metal products and industrial fuel prices, official data showed.

Analysts said that the inflation of 7.57 per cent was “slightly higher” than their expectations and this could be due to price increase in tea and certain items in the steel group. India’s wholesale price index (WPI) based inflation now stood highest since November 13, 2004, when it was 7.68 per cent.

Economists expressed confidence that the recent fiscal and monetary measures would yield results in the coming weeks. They, however, noted that inflation was unlikely to return to the comfort zone of the Reserve Bank of India any time this fiscal.

“There could be some easing of food inflation given the good wheat production and likelihood of good monsoon. I see some temporary relief on food side. But commodities are tough to predict. The inflationary pressures will remain. It doesn’t look like inflation coming within the comfort band of the RBI or the government,” Mr D.K. Joshi, CRISIL’s Principal Economist, told Business Line.

He said that the Government’s fiscal measures initiated few weeks back have impacted inflation. “My view is they have impacted. Otherwise inflation would have been even higher,” Mr Joshi said. As part of its inflation management strategy, the Government has already undertaken three rounds of fiscal measures that cost the exchequer about Rs 6,300 crore. The RBI has also announced a 75 basis point increase in cash reserve ratio (CRR) last fortnight in April.

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