Inflation at 13-year high at 12.01%

Inflation crossed 12% for the first time in 13 years at 12.01% for the week ended July 26, on the back of costlier food items.

Increase in the prices of some food articles and manufactured products pushed inflation to a 13-year high of 11.98 per cent for the week ended July 19. The increase prompted economists to predict another 25 basis points increase in the central bank’s short-term lending rates.

Last week on Tuesday the RBI raised its key lending rate for the third time in two months, taking it to its highest in seven years to quell price pressures, dampen demand and keep inflation expectations in check. The apex bank hiked the benchmark short-term rate by 50 basis points, about 25 bps more than what the market had expected, and the cash reserve ratio, the amount of funds banks must keep on deposit with it, by 25 basis points to 9 per cent to absorb surplus cash in the banking system.