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Thursday, April 8, 2010

PRICES ON FIRE

Food prices up 17.7%, fuel rate hike fears


New Delhi: Driven by rising prices of milk, fruits and pulses, food inflation jumped to the month's high of 17.7% in the last week of March, and may prompt RBI to further tighten key rates in its policy on April 20. 
    Food inflation rose by 1.35 percentage points since the previous reporting week and will have implications for the overall inflation data for March, which will be released next week. 
    The overall inflation rate, which includes changes in prices of manufactured goods, was 9.89% in February and is expected to cross the double-digit mark in March. 
    "Now it (food inflation) is spreading to non-food items which implies that the RBI may have to start tightening the monetary policy," PMEAC 
member G Govinda Rao said. 
    The RBI had last month raised the repo and reverse repo rates, which are the rates at which RBI lends and borrows from money from banks, by 25 basis points to 5% and 3.5%, respectively, to prevent food inflation from spreading to manufactured goods. It may take more steps in the annual monetary policy to be unveiled on April 20. AGENCIES


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