Tuesday, June 15, 2010
Economy on the boil; RBI may step in
Chief economic adviser Kaushik Basu said that rising food prices had virtually stabilized and inflation is now being driven by manufactured products such as iron and steel
Inflationary pressure has shifted to manufactured products from food, a trend that will make it more difficult for the Reserve Bank of India to stanch rising prices without hurting economic growth.
Wholesale price inflation in May accelerated faster than expected to 10.16%, according to data released on Monday. Chief economic adviser Kaushik Basu said that rising food prices had virtually stabilized and inflation is now being driven by manufactured products such as iron and steel. Rising domestic demand is fanning inflation and mounting pressure on the central bank, which meets July end, to tighten monetary policy.
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