Indian inflation edges up further, rate hike seen
2011-03-14 18:45:36
India's inflation edged higher in February, data showed Monday, defying forecasts and raising pressure on the central bank to hike interest rates more aggressively to tame prices.
Annual inflation, measured by the wholesale price index, rose to 8.31 percent in February from 8.23 percent the previous month, a government statement said.
Economist expect the central Reserve Bank of India (RBI) to hike rates to tackle surging prices when it meets on Thursday.
The government has endured public criticism over price rises but inflation has not fallen as much as expected despite previous rate hikes, analysts say.
"Inflation pressures are unabated, as prices of non-food manufacturing products continue to rise due to a surge in demand," said Rupa Rege Nitsure, chief economist with state-run Bank of Baroda.
"This is an important reality check. The RBI must raise rates more aggressively," she told AFP, calling for a 50 basis point rate hike when the central bank meets to decide on monetary policy.
Most analysts expect the RBI to hike rates by 25 basis points.
The central bank expects inflation to decline to seven percent by the end of the current fiscal year to March 31, but that is still above its comfort level of five to six percent.
To reduce inflation, the RBI has raised its key policy rates seven times in a year, making it the most hawkish central bank in Asia.