Inflation likely to rise further: Barclays

Inflation is likely to continue moving northwards and the country is expected to witness more controlling measures such as increase in retail fuel prices in the near future, a latest report by British banking giant Barclays says.     

"Upward pressure on inflation is likely to continue throughout the year, largely due to rising food prices and elevated oil prices...The Indian government recently raised retail fuel prices by around 10 per cent, and we expect there is more to come," Barclays Wealth Research said.     

The rise in the wholesale inflation rate is largely due to increase in food and oil prices, Barclays said in the latest report titled 'caging the beast'.     

Inflation had surged to 12.44 per cent for the week ended August 2. Fruit prices went up by 8.9 per cent, pulses became dearer by 1.4 per cent during the week. While, in the fuel category, the price of diesel oil rose by 16 per cent.     

The annual rate of inflation for the week ended June 7, was revised from 11.05 per cent to 11.66 per cent.     

Earlier, the global investment banker had said: "We believe WPI inflation will remain in double-digit territory until May 2009. We expect WPI inflation of 17 per cent by September 2008".     

Various measures were taken to contain inflation, like export ban were imposed on items such as pulses, wheat, rice, cement and some steel products. Besides, on July 29, the Reserve Bank of India increased both the Repo rate and the cash reserve rate (CRR) by 50 basis points and 25 basis points respectively, taking both to 9 per cent.