Inflation rose to 4.27% for the week ended June 30 from 4.13% in the previous week, triggered by an increase in prices of food articles and some manufactured items. The wholesale price-based inflation, which stood at 5.21% in the corresponding week last year, rose for the second week in a row after rains disrupted supply of vegetables, making them costlier.
But analysts expect the Reserve Bank of India to keep interest rates unchanged during its quarterly credit policy review on July 31, as inflation is within the central bank?s limits. ?Interest rates are likely to remain stable at this point,? said Rajiv Kumar chief executive of Indian Council for Research on International Economic Relations (ICRIER).
The current inflation rate is still below RBI?s projection of close to 5% for the current fiscal and within the target of 4-4.5% in the medium term.
HDFC chairman Deepak Parekh had said earlier this week that interest rates had peaked and were unlikely to increase further. But it was also unlikely that the rates would come down, he said.
During the week under review, vegetable prices soared 4.5%. Prices of all food articles were up 0.7% with pulses like masur becoming costlier by 5%. Prices of condiments and spices went up 2% while that of bajra declined by 1%.
Various manufactured items, too turned costly. Rice bran oil prices rose 3%, khandsari 2% and groundnut oil, cottonseed oil, ghee, maida and gingelly oil 1% each.
Epoxy resins were expensive by 58% while tablets other than vitamins and penicillin went up by 3%, ceramic tiles by 2%, footwear western type by 1% and zinc ingots by 4%.
Computer and computer-based systems were dearer by 3% while other electrical equipment went up 11%. But prices of printing papers and canvas footwear were cheaper by 1% whereas zinc was down by 5% and zinc ingots by 4%.