labels: economy - general
Inflation could rise 100 basis points by year endnews
30 October 2006

Annual wholesale price inflation hit a four-month high of 5.26 per cent in the 12 months to Oct. 14, edging nearer to the top of the central bank''s estimate.

But analysts say sustained demand for goods could see the inflation rate rise by nearly 100 basis points by end-December.

Asia''s fourth-largest economy has grown at an average 8 per cent in the past three years, industrial output rose 9.7 per cent in August from a year earlier and analysts have said consumer demand is strong enough to prompt a rate increase.

"Manufactured products inflation has remained relatively moderate so far, although it has edged higher to 4.2 per cent, year-on-year as on Oct. 7, 2006, from 3.0 per cent a year ago," the central bank said.

It said buoyancy in manufacturing and services, along with a recovery in domestic stock markets and a positive investment climate suggested recent growth momentum would be maintained in 2006-07.

It estimates that the economy will grow at 7.5-8.0 per cent this year.

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Inflation could rise 100 basis points by year end