Inflation On The Increase In India

By Stewart Douglas

Official figures released today in India have shown an increase in the rate of inflation for the week ended July 28th.

The figures released today show rising prices across a number of key products as determined through the consumer price index, leading to growing speculation about further inflation-calming measures in the near future.

One of the world’s most rapidly expanding economies, India have been actively engaged in fighting inflation over the last few months in hand with ensuring the continued growth and prosperity of the economy.

Most recently, the cash reserve ratio dictating mandatory bank reserves was dramatically increased to reduce the money supply, and hence reduce the free availability of cash that can push up prices at a consumer and business level.

Earlier in the week, the Indian government implemented stricter foreign borrowing regulations at a commercial level to prevent growing money supply - yet another measure to curb a major contributor to inflation.

Nevertheless, today’s figures released by the Ministry of Statistics and Programme Implementation have shown an increase in inflation from 4.36% at the previous week to 4.45% on a yearly basis, largely attributable to growing food and crop prices, whilst fuel and electricity costs remained largely stable, consistent at last weeks level of growth.

The annual rate of inflation is currently projected at 5.09%, up from 4.72% at the same time last year, reflecting the growing problems faced by the runaway Indian economy.

Analysts have predicted that the Reserve Bank of India will likely increase cash reserve ratios once again before the end of 2007, with recent efforts to calm inflation apparently not taking their toll.

Furthermore, with increasing worldwide credit pressures, the Indian government is anticipated to favour raising the CCR yet again to promote a wider macro-economic agenda.