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Revision in inflation numbers ‘a cause for concern,’ interest rates may rise: expert

Even as wholesale price inflation, as measured by the Wholesale Price Index or WPI declined in April, experts have raised questions about the upward revision of earlier data.

According to numbers released today, inflation in the country came down marginally to 8.66% in April from 8.98% announced for March last month.

However, the government also revised upwards the inflation numbers for March and February. While it was revised to 9.04% for March, it went from the initial estimate of 8.31% to 9.54% for February.

Calling the upward revisions “a cause of concern,” Anis Chakravarty, Director of audit and consulting organization, Deloitte, Haskins & Sells said: “Some level of explanation from the policy-makers on this account would have been welcome.”

Chakravarty also pointed to an increase in prices in the short-term due to the increase in prices of petroleum-based fuels. The price of Petrol has already been hiked 11 times in the last 11 months, going up by around 35% in a year. He said he expects the Reserve Bank to increase interest rates due to the anticipate rise in money-supply, as indicated by rising prices.

“Though inflation has marginally softened in April, it continues to remain sticky and considerably higher than the desired level. There is a worry that with the recently announced fuel price increase, inflation would again elevate in the short run. Further, with higher than expected IIP numbers and a good monsoon predicted, inflation may rise during the second quarter of this year. A series of further monetary policy tightening therefore cannot be ruled out at this stage,” he said.

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