India: Inflation in June hits to 9.44 per cent - pressure for interest rate hikes
INDIA'S annual inflation accelerated to 9.44 per cent in June, data showed, raising pressure for more interest rate hikes even with growth cooling in Asia's third-largest economy.The increase in the benchmark wholesale price index - the Government's most-watched cost-of-living monitor was up from May's 9.06 per cent inflation rate, the commerce ministry reported.June's figure was below market forecasts of 9.7 per cent. But it was still well above the Reserve Bank of India's comfort level of 5.0 to 6.0 per cent -- making more rate rises virtually inevitable, analysts said.The below forecast figure "won't stop the central bank from hiking" at its scheduled meeting on July 26, said Credit Suisse Economist Devika Mehndiratta.She, like other economists, forecast a quarter-point rise in the leading repo rate at which the Reserve Bank lends to commercial banks.Inflation is one of the biggest headaches for India's Congress-led government, heaping misery on the nation's legions of poor. It is the highest rate among major Asian economies.Expectations of an increase at this month's Central Bank meeting were buttressed by a sharp upward revision in April's inflation rate to 9.7 per cent from 8.7 per cent.Mehndiratta said she also expected an upward revision to the June figure that could kick inflation into double-digits, adding the Central Bank is “unlikely to be letting its guard down in such a scenario”.Finance Minister Pranab Mukherjee said in a statement the figures were a "concern", adding the Government and Central Bank were working together to reduce inflation, which has been at over nine per cent since December.
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