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Inflation up to 9.06 per cent in May, pressure from manufactured items

Headline inflation went up to 9.06 per cent in May on the back of rising manufactured products and petrol prices.

twitter-logoPTI | June 15, 2011 | Updated 07:54 IST

Resuming its upward climb, the headline inflation in May rose to 9.06 per cent on costlier fruits, petrol and manufactured goods and heightened fears of another rate hike in interest rates by the RBI on Thursday.

Even as the increasing prices of essential items pushed up the inflation rate during the reporting month from 8.66 per cent in April, a concerned government said that more steps could be taken in the coming months to tame price rise.

"We would keep a close watch on developments, both domestic as well as international, in the coming months and make appropriate adjustments as we go along," Finance Minister Pranab Mukherjee said after the announcement of the May inflation numbers.

Read how you can deal with rising interest rates and still get that loan

The experts, however, feel that the Reserve Bank, which has raised key policy rates nine times since March 2010, will go in for another round of monetary tightening at its mid-quarterly review slated for Thursday.

The RBI would try to balance the need to tame inflation and promote industrial growth, which has slipped to 6.3 per cent in April from 13.1 per cent a year ago.

"I think the RBI will probably look at the inflation issue more seriously and will take some action... (it) will probably decide to do in the context of the high level of inflation," Prime Minister's Economic Advisory Council Chairman C Rangarajan said.

The inflation numbers for May also capture the increase in petrol prices by over Rs 5 litre last month. Besides other items like cotton textiles in manufactured segments and some food articles like fruits, milk and egg, meat and fish also became expensive in May.

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