Inflation touched 8.75 per cent by May end, the highest during the United Progressive Alliance government's tenure, mainly due to rising prices of food articles and vegetables amid fears that the recent increase in fuel prices would push it past 9 per cent.
The latest figures of rate of rising prices for the week ending May 31, up from 8.24 per cent in the preceding week, bring new worries to the 'aam admi' leading to apprehension that costlier diesel prices would have a chain reaction.
The rising prices of milk, pulses, spices, fruit and vegetables continued to pose a major challenge before the Manmohan Singh government in an election year even as the finance ministry in tandem with the Reserve Bank of India [Get Quote] pursued tough policy and monetary measures to tame inflation.
The previous high in the UPA regime was 8.33 per cent as per the provisional figure in the week ended August 28, 2004.
Analysts predict that once the impact of rise in prices of petrol, diesel and cooking gas, announced earlier this month, is taken into account the inflation, which is now at a seven-year high, would go past nine per cent mark when early June figures come out.
As part of inflation control measures, the RBI had on Wednesday increased the interest rate on its short-term lending to bank by 0.25 per cent to eight per cent, prompting the banks to consider a rise in lending rates for consumers and industry.
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