Inflation rose by 0.68 percent in a month’s time

Indian inflation rose from 6.87 percent recorded in July 2012 to 7.55 percent August 2012 as per the data released by the government on 14 September 2012. It’s projected that the rise in the price of diesel on 13 September 2012, will impact it adversely. The report has reduced the chances of cut in interest rates by the Reserve Bank of India. The presented data has even crossed the median of 7 percent as well as the top of 7.4 percent, the estimates presented by sixteen economists.

Slipping of bond prices maturing in 2022 has seen a benchmark drop of 8.15 percent with an intraday low of Rs 99.77 from that of Rs 99.97 before the release of this data. The growth in share market after the fuel price rise was a positive sign for the dubious fiscal condition of India. The benchmark sensitive index of the Bombay stock exchange traded at 2.2 percent higher at 18410.14.

RBI’s prolonged battle to against inflation by raising the rate of interest 13 times in a year’s time (2010-2011) was able to witness limited success because of government’s failure in addressing the bottlenecks of supply diluting the efforts of new monetary policies. Shaken fiscal policies have also been a reason for this failure in addressing the issue. The deputy governor of RBI K.C. Chakrabarty stated that to control inflation is their top priority at this point of time.