Inflation has hit a 3-year high and stands at 7% versus 6.68% for the week ended March 22. The market had estimated it at 6.52%.
The vegetable prices are up 4.9% for the week-ended March 22; while the primary articles WPI (Wholesale Price Index) is 1.8% for the same week end. The minerals WPI is up 38.2%, while the metallic minerals WPI is up 42.8% for the week-ended March 22.
The figures have come as surprise as most experts were looking at 6.25-6.75%. Most analysts had predicted that the headline inflation numbers could come off by almost 25 bps on account of a high base effect.
The markets have taken a knock back approach after inflation numbers announcement with capital goods, technology, auto, banking, power and telecom stocks taking a beating.
On the monetary policy front, there is a high probability of some or moderate amount of monetary policy riding in the April policy as most experts see no respite for inflation for next 3 months.
Bankers feel that RBI action should work in terms of easing supply constrains and pull down inflation by 50-60 bps.
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