For most FY'08, inflation below RBI's tolerance limit of 5%

Inflation has shot up to 7.41 per cent towards the close of last fiscal, but for most part of the year, it remained within Reserve Bank of India's (RBI) comfort level of 5 per cent.

Though the year 2007-08 began with the wholesale price-based inflation touching 6.09 per cent, it was successfully kept below 5 per cent for most part of the fiscal through tight RBI monetary policy and government steps to boost supply of commodities.

Official data show that the inflation rate remained at sub-four per cent level in 23 weeks and between 4 and 5 per cent in 16 weeks of the last fiscal.

Wholesale prices rose between 5 per cent and 6 per cent year-on-year for eight weeks, between 6 and sub-seven level for three weeks. For last two weeks of the fiscal, it was 7 per cent and 7.41 per cent respectively.

The rate is expected to come down as a slew of measures announced by the government like ban on export of non-basmati rice, extension of ban on pulses and cut in import duties on food items came into force from the beginning of this fiscal, analysts said.

The RBI is scheduled to announce the monetary policy for this fiscal on April 29. ADB expected inflation to fall to 4.4 per cent this fiscal.

The ADB projected that these duty cuts will have an impact after 2-3 weeks, while global banker Lehman Brothers has expressed apprehension over the efficacy of such fiscal sops and trade policies to tame the soaring prices.

The US-based investment banker said in a report that encouraging imports to augment domestic supply will mean importing at higher global prices.