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Annual inflation could cross 8% (1)   16-May-08 14:31Tracked by (0)  
Posted by:   stox & more on ( 16-May-08 14:31 )
India's annual inflation rate headed towards 8 percent in early May, clocking a fresh 3-½ year high, but analysts said it was unlikely to provoke more monetary steps for now as growth was showing signs of a slowdown.

The wholesale price inflation rate, India's most widely watched measure, rose 7.83 percent in the 12 months to May 3, higher than previous week's 7.61 percent and above a median forecast of 7.50 percent in a Reuters poll.

The surprise jump, stemming from higher prices of industrial fuel, metal products and some food items, comes after a series of measures by the government and the central bank to calm price pressures in Asia's third-largest economy.

"I think pressures will persist in coming weeks and will prevail above 7 percent for the next three to four months," said D K Joshi, principal economist at domestic ratings agency Crisil in Mumbai.

"It's a Catch-22 situation as they (central bank) have to manage slowing growth and rising inflation. It's a tough task."

Analysts expect the inflation rate to remain elevated and say it could climb to 8 percent in coming weeks. In addition, previous weeks' readings have consistently been revised higher.

But industrial output growth slowed to an annual 3 percent in March, its weakest in six years, data showed this week, sparking concerns about a wider slowdown in the broader economy.


*courtesy ET*
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