CMIE forecasts 5.5 % inflation for FY09

The kharif crop is expected to play a major role in the moderation of inflation, CMIE has said. Inflation, measured in the Wholesale Price Index (WPI) increased to 11.05 per cent for the week ended June 20.

Inflation started rising rapidly since January 2008 and went up by 441 basis points in a span of just five months. The Government partially passed on the burden of rising international crude oil prices to the Indian consumer by hiking prices of petrol, diesel and LPG earlier this month, which accounts for 4.91 per cent of the WPI.

The price hike in the same is expected to push up headline inflation by 50-60 basis points, CMIE said. Although inflation is at a high level, it is unlikely to pinch Indian consumers as badly as suggested by the WPI numbers, it said.

The rapid rise in inflation, witnessed in the past five months, is not across all heads of the WPI. Nearly 85 per cent of the rise in headline inflation has come on account of the sharp rise in prices of select items