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Indian inflation steadies at 11.91%

AFP - Friday, July 18

NEW DELHI (AFP) - - India's annual inflation rate has steadied at 11.91 percent, defying expectations the figure would cross the 12 percent mark, according to the latest government data on Thursday.

The figure for the week ended July 5 was up only marginally from 11.89 percent for the previous week, according to the Wholesale Price Index, India's most closely watched cost-of-living monitor.

Analysts had expected the rate would jump to around 12.1 percent.

Still, economists said the figure was still too high and that the Reserve Bank of India was still under pressure to raise rates when it next meets at the end of the month.

"This is not an indication of an inward trend," Rupa Rege Nitsure, chief economist with Bank of Baroda, said of the latest figures.

"Food prices are still high, my worry would be the phase-wise impact of the fuel price hike," she added, referring to the continued impact of a hike in pump prices.

India's government raised state-set fuel prices for the second time in a year on June 4 to stem huge losses at state-run oil firms.

"Inflation expectations are high, the RBI will have to remain aggressive in its stance," she added.

"It is a surprise... but I am not comfortable with this level," said Siddhartha Sanyal, economist with brokerage Edelweiss Securities. "It does not indicate an easing of prices."

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