Oil prices put pressure on inflation

Concerned over continuing upward spiral in global oil prices, Reserve Bank of India [ Get Quote ] on Tuesday warned that the inflation risk remained high and will persist well into 2006.

The consequent rise in domestic prices of LPG and kerosene could push up inflation in 2006-07, the central bank stated in the third quarter review of the Monetary Policy.

The Monetary and Credit Policy 2005-2006

However, it retained inflation projection at 5-5.5 per cent.

It also indicated a pick up in aggregate demand getting stronger with some manageable spill over into the external sector in the form of widening trade and current account deficits.