Indian Inflation inches upto 7.57%

An increase in the Wholesale Price Index due to rise in primary articles and manufactured goods drove India's inflation for April was reported at a 42 month high of 7.57%.

While economists believe that inflation containment as an exercise will only show some impact by Q1 of 2009, finance minster P Chidambaram claimed that current inflation is likely to be contained through reduction in food prices due to his government's programme to acquire wheat and rice in large quantities. Economists are expecting the indian economy to slow down further with inflation hitting 8% in the recent future.

Recent actions of RBI also indicate that the central bank is focussed on moderating and managing liquidity to manage inflation. Interest rates are already high impacting GDP growth and the central bank may raise CRR again by 50 to 75 basis points if liquidity abudance is not contained in the next few months.

I feel that the elections in Karnataka will give us the first hand feedback to the rising costs and inflation in the indian economy.