First Prime Group Indian inflation approaches 12 per cent
Released on: July 22, 2008, 11:04 pm
Press Release Author: dave turner
Industry: Financial
Press Release Summary: First Prime Group: Efforts To Curb Inflation Moderate Economic Growth But Enormous Potential Remains
Press Release Body: \"First Prime Group\": Wholesale prices in India grew by 11.89% in the year to the end of June according to official figures. This represents the fastest rate since the measure began in 1995 and means that inflation has tripled over the last six months, driven by the ever-rising cost of food and fuel. Figures also showed that the output of India\'s factories grew by its slowest rate in six years. Industrial output rose 3.8% in May, compared to the same month in 2007, a sharp drop on the April\'s 6.2% growth. First Prime Group pointed to comments made by Standard Chartered Bank, \"The industrial output numbers ... are a reflection of manufacturers anticipating a slowdown in consumer spending as high inflation bites into incomes and some scale-back of fresh production plans\". An individual close to First Prime Group speculated that the ongoing requirement for infrastructure development was unlikely to abate for several years to come and this slight manufacturing contraction was unlikely to prevail over anything but the short-term. The Reserve Bank of India has increased interest rates to try and curb inflation. Last month, it increased its main lending rate twice in two weeks to 8.5%. Higher interest rates could cause economic growth to slow further, analysts predict but this is preferable to rampant inflation Economists suggest the economy is unlikely to grow at 8-8.5% this year, as the government has predicted.
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