Inflation up a wee bit, at 5.45%

An increase in the prices of some primary articles like minerals pushed up inflation marginally to 5.45 per cent for the week ending November 18, compared with 5.29 per cent in the previous week.

According to analysts J P Morgan, the final wholesale price index inflation could be closer to 6 per cent, which is higher than the RBI's forecast of 5-5.5 per cent. This, it said, was on account of an increase in the magnitude of revisions.

"The magnitude of revisions to the provisional WPI inflation rate has increased in recent weeks to 0.6-0.7 per cent-points from 0.1-0.2 per cent-points. Assuming the magnitude remains unchanged in the next few weeks, the final reported WPI inflation will be closer to 6 per cent," it said.

"We maintain that the Reserve Bank of India (RBI) is likely to hike interest rates by 25 basis points at the January policy meeting but do not rule out the possibility of an earlier hike," it said, adding that the demand-driven inflation pressures and the over-extended credit cycle warranted a sterner policy response.

Finance Minister P Chidambaram said the rise in inflation was on account of primary products, especially pulses.

"Inflation is slightly higher than we would have liked, but then I have said it is largely driven by supply-side constraints. We have to manage it," he felt. Deputy Governor of RBI Rakesh Mohan said in Mumbai the recent cut in retail fuel prices would have an impact on inflation.

The increase in inflation was driven by the index for "minerals" group, which rose by 1.7 per cent to 426.9 (provisional) from 419.7 (provisional) for the previous week due to higher prices of steatite (27 per cent) and iron ore (2 per cent).

However, the prices of fire clay (31 per cent ) and magnesite (2 per cent) declined.

Also, the index for manufactured products rose by 0.1 per cent to 180.3 (provisional) from 180.1 for the previous week. However, prices of textiles, beverages, tobacco and tobacco products, and food and non-food articles declined during the week.

The final wholesale price index for "all commodities" stood at 207.9, compared with 206.6 (provisional), and the annual rate of inflation stood at 5.43 per cent, compared with 4.77 per cent (provisional).