RBI Governor D. Subbarao said that inflation will start moderating from July. Subbarao was addressing RBI’s central board meeting in Patna. RBI board met here to discuss various economic issues. The RBI governor said that he was sticking to 8.5% inflation projection made during the credit policy.
India’s food inflation rose for the fourth straight week in early February, heightening worries that it was driving up headline inflation past official forecasts and increasing the chance of the central bank pushing up rates. The food price index rose 17.97 percent in the 12 months to February 6, higher than an annual rise of 17.94 percent in the previous week, data released on Thursday showed.
The fuel price index rose an annual 9.89 percent in the same week, down from a rise of 10.4 percent on year the previous week. A persistent rise in food and fuel prices along with a pick up in manufacturing prices are expected to push headline inflation from 8.56 percent in January to 10 percent by March, according to analysts and India’s chief statistician Pronab Sen.
Inflation in manufacturing picked up to 6.55 percent from about 5 percent in December, a sign that inflationary pressures were spreading to other sectors of the economy.
The RBI is widely expected to raise borrowing rates at its April review after surprising markets with a bigger-than-expected rise in banks’ cash reserve requirements in January.