India inflation rises to 7.55%

June 14, 2012
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The market expects RBI to throw its weight behind the rupee/AFP
NEW DELHI, Jun 14 – India’s inflation rose marginally to 7.55 percent on an annual basis in May despite slowing economic growth, data showed Thursday, posing a dilemma to the central bank ahead of a meeting next week.

The closely watched Wholesale Price Index was up from 7.23 percent in April.

The once-booming Indian economy has been hit by a lack of economic reforms, high interest rates, plummeting business confidence and the eurozone debt crisis, analysts say.

In the January-March period, the economy grew just 5.3 percent, its slowest quarterly expansion in nine years.

This has led to calls from businesses for the Reserve Bank of India, which meets on Monday in Mumbai, to slash interest rates to spur borrowing and investment. The bank in April cut rates by 50 basis points, the first reduction in three years.

But inflation remains above the bank’s comfort level, even though it has come down from levels of more than 10 percent seen last year.

The May reading was slightly below the median forecast of 7.59 percent by 15 economists polled by Dow Jones Newswires.

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