India’s ‘galloping’ inflation
It is not just the
According to new figures, Indian inflation has risen at its fastest rate in seven years. Wholesale price inflation rose 8.75% in the 12 months to 31 May, rising from the previous week's 8.24% and above analyst forecasts. The inflation rate is now at its highest since February 2001 and well above the government's target of between 5% and 5.5%.
The rising cost of food and oil are pressuring prices and interest rates are expected to rise. The central bank has already raised rates to combat inflation, lifting its key lending rate by 25 basis points to 8% this week, its first rise in a year. Analysts fear inflation could exceed 9%, a 13-year high.
Rupa Rege Nitsure, chief economist at Bank of Baroda, commented: "With this kind of galloping inflation one cannot rule out the possibility of it touching double digits in coming monthsâ€.