Food prices push up inflation

Inflation rose to -1.17 per cent for the week ended July 11 compared to -1.21 per cent in the previous week as food articles like pulses,cereals,fruits and vegetables turned expensive. The wholesale price index during the corresponding week a year ago was as high as 12.13 per cent. Despite inflation remaining in the sub-zero level for the sixth consecutive week in a row,the RBI is unlikely to cut key policy rates when it reviews the credit policy on July 28. HDFC Bank economist Jyotinder Kaur said there is enough liquidity in the system,so the RBI is likely to keep all the key rates unchanged. It nevertheless must continue with open market operation buyback to ensure smooth absorption of paper supply,she said. On Thursday,plan panel deputy chairman Montek Singh Ahluwalia allayed fears over the significant hardening of interest rates in view of the high government borrowings,pegged at around Rs 4.5 lakh crore this fiscal.