New Delhi, June 6 : The Central Government's declaration of a fuel price hike on Wednesday has raised inflation to 8.24 per cent from 8.1 per cent last week. This is the highest inflation in the last three and a half years.
Inflation for the week ending March 29 was revised upwards to 7.75 per cent from 7.41 per cent.
Petrol prices were hiked by Rs 5 per litre, diesel by Rs 3 a litre and cooking gas by Rs 50 a cylinder. The huge price hike was, however, offset by states reducing sales tax and custom duties.
Experts anticipate a steep increase in inflation.
HDFC Bank Chief Economist Abheek Barua said, "Inflation could cross nine per cent in the near term owing to the hike in petrol and diesel prices." To absorb the excess cash from the banking system to contain inflationary pressures, the Reserve bank of India (RBI) has raised the proportion of deposits that banks must set aside to a seven-year high of 8.25 per cent.
Ahead of the polls this year and next, the Central Government has cut import duties on edible oil, curbed rice exports and forced steel and cement companies to cut prices.