Lanka Business Online

Indian inflation ‘jumps’ to 3.79-pct, no rate cut

NEW DELHI, Jan 18, 2008 (AFP) – India’s inflation jumped nearly three-tenths of one percentage point to its highest level in four months, data showed on Friday, making chances of an interest rate cut more remote. But economists expect the economy to lose steam in coming months as the effects of aggressive monetary tightening to curb prices take hold. Annual inflation rose to 3.79 percent for the first week of January from 3.50 percent a week earlier, according to the wholesale price index, India’s most watched cost-of-living monitor.

Inflation stood at 6.37 percent in the same period a year earlier.

While inflation has stayed well below the central bank’s ceiling of close to five percent for the fiscal year to March 31, 2008, analysts expect the rate to rise further in coming weeks on the back of an expected increase in state-set fuel prices to cope with surging global oil costs.

The central bank is also concerned about strong world commodity prices, analysts say, making it likely to keep interest rates on hold at its next policy meeting later this month.

The latest inflation data showed that prices of some fruits and vegetables fell but costs of fuel items rose along with some manufactured pro

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