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Monday, September 22, 2014

Sunday, June 29, 2008
Business

India inflation maintains upward trend

India's annual rate of inflation has risen to 11.42 percent on the back of rising prices of food, fuel and manufactured goods, government data released Friday showed.

Inflation jumped to 11.42 for the week ended June 14, against 11.05 percent for the previous week. The rise was marginally higher than analysts' expectations, and keeps the rate at a more than 13-year high.

The Reserve Bank of India (RBI) on Tuesday hiked its short-term lending rate as well as the Cash Reserve Ratio, or the amount of cash banks must hold in reserve, to tame prices.

The coalition government is under tremendous pressure to control prices, as it fears voter discontent ahead of national elections scheduled by May 2009 at the latest.

Analysts said they expected further monetary tightening by the central bank.

"We expect the RBI to remain aggressive in its monetary policy tightening in coming months," said Anubhuti Sahay, an economist with Standard Chartered Bank.

Standard Chartered said the RBI may raise its short-term lending rate by a further 50 basis points -- from the current 8.5 percent -- by the end of the year.

"The pressure on inflation is likely to sustain in coming weeks," said Siddhartha Sanyal, an economist with brokerage Edelweiss Securities.

Price rises have overshadowed better-than-expected growth of 9.0 percent in the past fiscal year.

Economists expect growth to slow this year to around 7.8 percent on higher borrowing costs and tough global financial conditions. The prime minister has projected growth of more than eight percent.

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