Inflation stands at 7.41% versus 7% for the week ended March 29 . The market had estimated it at 7%.

The iron and steel inflation has gone up 5.6%. The inflation is highest since November 8, 2004. The manufacturing inflation is up 0.9%, while the inflation for all commodities is up 0.5%.

The high inflation numbers have surprised most experts as most analysts were expecting 7-7.05%. Arun Kaul, CFO of Punjab National Bank says, "inflation is a serious worry and is much above the RBI’s comfort level. There could be some monetary measures taken by RBI which could adversely affect the bond market." 

According to experts, the fiscal measures taken are yet to have an impact and  will have an effect during the weeks to come. The fiscal measures are yet to show result on the whole sales price index. They believe that the high numbers are due to steel producers passing on high input prices to the final prices. "On the steel sector, obviously the pressure is on the input side and that is why the steel prices are becoming firmer by the day. I think the effect of the fiscal policy on the WPI will take some time to work itself out. Globally there has been problem with supplies, not only with commodity side but also with the soft commodities such as rice and wheat. So we are actually totally forgetting about those events and the price cycle that is happening on those fronts." says Indranil Pan, Chief Economist of Kotak Mahindra Bank.

Pan also adds that Inflation could actually be heading to around 8% and the average could be somewhere around 6.8% for this year. Gaurav Kapur, ABN Amro however says that for the rest of 2008, inflation may average around 6.5% with significant upside risk.

Partho Mukherjee, Sr VP-Forex & Treasury at Axis Bank says, "inflation numbers might worsen little more and we do realize that options available to the RBI are somewhat limited at the moment"