The inflation word is back to haunt everyone once again. The latest figures released shows that for the last week of April the inflation stands at 7.57% as against 7.33% in the previous week.  It was higher than the expected 7.27% by the analysts.  The government  has taken a few precautionary measures  like  hike in the CRR  a few days back which actually sucks out a whole lot of money from the system and thus lowering the purchasing power capacity.

The crude oil prices hovering around the $120/barrel along the rising food prices have led to such a sharp rise in the inflation figures this time. If the inflation remains at these levels then RBI will be forced to increase the CRR again and manage liquidity to some extent and also the rising inflation.

Some even feel that these high levels of inflation is here to stay and would hover around 7 to  7.5 % for another 3-6 months. This would again have a bad impact on the markets when it opens again.But somehow the markets resisted this news on the last trading day of the week and was up by 312 points. Markets need to learn to stay with this for some more time in future.

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