Inflation at Three Years High

Here is the news of the week. Inflation surged to over three-year high of 7.41% for the week ended 29 March, mounting pressure on the Reserve Bank of India to further tighten money supply in its forthcoming annual credit policy later this month. If you have observed, inflation is showing a huge impact on the secondary markets as well.

Wholesale price-based inflation, which stood at 7% the previous week, surged this time mainly on account of rising prices of fruits and vegetables, pulses, cereals, condiment and spices and some manufactured items.

Inflation soared despite high base of 5.94% in the corresponding week a year ago, belying market expectations in the range of 7.05%.

The high inflation may prompt RBI to take tough monetary measures to ease out inflationary pressure in its annual credit policy, scheduled to be announced on 29 April.