S and P forecasts double digit inflation in India till February 2009

New Delhi, August 12 : Standard and Poor's, the global rating agency, has forecast that inflation in India is likely to remain in double-digit figure till February 2009.

Standard and Poor's Asia-Pacific Chief Economist Subir Gokarn in a teleconference with reporters said, "We expect the Wholesale Price Index (WPI) to continue in double-digit figures till February next year and after which it will drop below that level and remain favourable beyond March, 2009."

Gokarn also said that this could propel another rate hike from the Reserve Bank of India in October.

"After a rate hike in October, another rise in interest rates may be expected in January next year, if oil prices go back to their peak, but it has lesser probability," Gokarn added.

Inflation had touched 12.1 per cent, the highest in over 13 years, for the week ended July 26.

Following which on July 29, the RBI had raised banks' Cash Reserve Ratio (CRR), the mandatory deposits banks keep with the apex bank, by 0.25 per cent and short term lending rate to banks or repo rate by 0.50 per cent.

This was the fourth time that the CRR was hiked this fiscal and repo rate the third time by the RBI, in order to moderate credit growth.

ANI