Inflation today shot up to a 13-year high of 11.05%

Inflation today shot up to a 13-year high of 11.05 per cent fuelled by rise in prices of petrol, diesel and cooking gas. The rise in petrol, diesel and cooking gas prices announced by the government on June 4 put the pressure on price line pushing the inflation by week ending June 7, up from 8.75 per cent in the preceding week.On a week-to-week basis, petrol prices were up by 11 per cent, while aviation fuel were up 14 per cent. The cooking gas prices were up by 20% and high speed diesel by 10 per cent.Markets TankWithin minutes of the release of the government data, sensitive BSE index of stock markets tanked about 350 points, reflecting the nervousness of the investors about the efficacy of the measures being taken by the Finance Ministry and the Reserve Bank of India.The bankers are now expecting a tightening of monetary policies in the wake of higher inflation numbers. Axis Bank expects further monetary tightening, while UCO Bank sees RBI taking stern measures to cool prices. Some bankers also expect the RBI to act before its before its scheduled July meet on monetary policy. BNP Paribas expects a CRR hike even before the central bank’s July meet. Industry players in the interest-sensitive sectors are also alarmed at the sharp spike in inflation numbers, as the RBI may hike interest rates to cool prices. Leading automaker Maruti described the current situation as “out of control”. Real estate player Omaxe sees growth hit due to higher lending rates.Besides fuel prices, rise in prices of food products particularly edible oil and manufactured goods added to the pressure on price line and woes of the government.But analysts say that the inflation could moderate on a fall in food prices, led by a good monsoon. The inflation could cool to 6-6.5% by year end, Kotak Securities told NDTV. However, it warned that the government may raise fuel prices if global crude remains high.The inflation numbers in our country come in with a lag of around two weeks. The June 5 hike in fuel prices majorly accounted for the sharp rise in inflation numbers as the fuel prices were reflected in the figures for the first time since they were raised.