Inflation to fall below 8% by July: IEG

After remaining above the 8% mark for almost 18 months, inflation would moderate to 7.93% by the end of July, Institute of Economic Growth (IEG) has said in its forecast.

"The WPI (wholesale price index) inflation forecasts are 8.47%, 8.24% and 7.93% for May, June and July 2011, respectively," IEG said in its monthly monitor report.

Headline inflation in the country came down marginally to 8.66% in April on the back of moderation in the prices of certain food items.

However, the industrial growth rate would slow down to a dismal 4.84% by July-end, thereby, indicating that the growth momentum could slow down in the coming months.

"Though global recovery is picking up, the inflation pushed rate hikes will pull the growth down", IEG said.

The institute has pegged the IIP (index of industrial production) growth rate for May, June and July 2011 at 5.73%, 5.48% and 4.84%, respectively.

The IIP in March stood at 7.3%, almost doubling from the previous month.

Inflation, both at food and overall level, has remained at an elevated level for over a year despite the Reserve Bank's tight monetary policy stance.

The apex bank has hiked its lending (repo) and borrowing (reverse repo) rates nine times since March 2010, to rein in the spike in prices.