The latest level is much higher than the 4.32 per cent inflation recorded in the corresponding week last year and a step up from 11.42 per cent for the week ended June 14.
This will be the eleventh straight week of a sharp upward spiral in the WPI. The current financial year 2008-09 began with a final inflation rate of 7.71 per cent, rising in quick succession to 7.95 per cent and continuing on an uptrend ever since. The sharpest spike was recorded for the week ended June 7, when inflation rose to 11.05 per cent, on account of an increase in prices of petrol, diesel and cooking gas.
The Central Statistical Organisation (CSO) will release the data at noon on Friday. Analysts say the rise will continue for some time and provisional inflation data may soon breach 12 per cent and possibly range higher before heading downwards as recent monetary tightening and export curbs ease domestic prices.
However, if the government were to again hike domestic retail fuel prices (it has only passed on less than one-tenth of the recent crude oil price surge to end-users in India), then the price situation may well and truly explode.
The latest data therefore underscores the challenges the government and the central bank face in combating the rise in prices, especially of sensitive commodities like food grains, steel, edible oil, which have put it on the back foot at a time when the political headwind has turned against it over differences with the Left parties on implementing the India-US nuclear deal.
Experts say a further tightening of monetary policy is likely soon, but cautioned that it may well wait for the first quarter review of annual monetary policy scheduled for July 29.
The Reserve Bank has already resolved to respond swiftly on a continuing basis with both conventional and unconventional measures. The government may also take further fiscal and administrative measures to ease the domestic supply position.
Inflation: The silent killer!
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