The previous high inflation of 11.11 per cent was witnessed on May 6, 1995.
Leading economists and analysts predicted that price pressures would prompt the Reserve Bank of India to further tighten the monetary policy, possibly by making short-term lending to banks costlier.
This could further lead to increase in interest rates for cars, homes and consumer finance, economists said and feared that present situation could also force a hike in lending rates for the industry and many banks are already contemplating hiking the prime lending rate.
"The high inflation may force the RBI to increase the repo rate (short term lending rate to banks) by up to half a per cent," principal economist of rating agency Crisil D K Joshi told PTI, and added that unless fuel prices are controlled the prices would be a major challenge.
Image: A child takes part in a demonstration by the Communist Party of India (Marxist) against a fuel price hike in New Delhi recently. | Photograph: Manpreet Romana/AFP/Getty Images
Also read: How oil prices are wrecking the economy
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