The rate of food inflation, as measured by the wholesale price index (WPI), rose to 17.65 per cent for the week ended April 10, primarily due to high prices of milk products and perishables. Food inflation stood at 17.22 per cent in the previous week and at 8.16 per cent in the corresponding period last year.
With food prices continuing its upward movement, the overall inflation rate is expected to go further up from the level of 9.9 per cent in March.
Analysts project a rise in policy rates by the Reserve Bank of India (RBI) before its monetary policy review in July. RBI raised policy rates and the cash reserve ratio (CRR) by 25 basis points each in its fourth quarter monetary policy review earlier this week. Rising inflation may prompt it to further tighten monetary policy.
“If WPI remains sticky, at around 10 per cent, it may prompt RBI to react. RBI is of the view that inflation will come down, if it doesn’t, RBI will not hesitate to act in between policies,” said Crisil India Principal Economist D K Joshi.
