May 14, 2012, 03.04 PM | Source: CNBC-TV18
There was a sharp rise in price in April as inflation has inched up to 7.23%, much higher than 6.89% in March. According to CNBC-TV18, price jump in April was seen at 6.7%.
Prices continued to spiral upward in April, with inflation climbing to a higher-than-expected 7.23% from 6.89% in March . A CNBC-TV18 poll had forecast April inflation at 6.7%. Soaring food price was the main culprit, and the increase in excise duty and service tax effective this financial year also added to the inflationary pressures.
A steadily climbing inflation means that RBI will have little elbow room to cut interest prices. Inflation is expected to worsen in the coming months as the government will at some point have to raise fuel prices and electricity tariff.
Industrial output has been falling over the past few months, and while a section of players feel this calls for a cut in interest rates, the RBI is worried that easing interest rates at this stage may cause inflation to spiral out of control.
Here is a snapshot:
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Nomura sees 0.25% rate cut in April