The Reserve Bank of India (RBI) said on Friday after its mid-quarter review of the monetary policy that the petrol price hike effected by the oil marketing companies will marginally add to upward pressures on headline inflation.
"Oil marketing companies raised the price of petrol by Rs 3.14 per litre with effect from Sep 16, 2011. This will have a direct impact of 7 basis points to WPI inflation, in addition to indirect impact with a lag," the RBI said while hiking repo rate by 25 basis points.
The repurchase rate (repo), or the interest the central bank levies on short-term borrowing by commercial banks, has been raised to 8.25% from 8%.
Automatically, the reverse repurchase rate, or interest on short-term lending, gets hiked to 7.25% from 7%, since the central bank felt inflation levels remain well above its comfort zone.
Headline inflation based on the wholesale price index (WPI) nudged double digit levels at 9.8% in August, rising from 9.2% in the previous month. Read More
for detailed price charts.
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