Reddy: Alert

New Delhi, May 7 (PTI): The Reserve Bank of India today said the rise in inflation in April was ?not fully unanticipated? and it would maintain a ?close vigil? over prices considering the uncertainties in crude rates.

?The overall inflation level in April is not fully unanticipated and hence not inconsistent with our inflation projection of 5-5.5 per cent for 2005-06,? said RBI governor Y. V. Reddy. However, he said, ?Close vigil over prices will be maintained.?

Barring fluctuations on the oil front, both with regard to international and domestic prices, the annual policy projection on inflation remained valid at this stage, he added.

The WPI-based inflation rose to 5.91 per cent during the week ended April 23 from 5.64 per cent a week ago. However, Reddy said the price increase during the week for certain commodities like tea (24 per cent), fruits and vegetables (5 per cent), furnace oil (4 per cent), and metals (1.6 per cent) had been significant.

Rate regime

The interest rate scenario is stable and RBI does not see much impact of the recent hike in Fed rates on the domestic economy. ?The increase of 25 basis points to 3 per cent was anticipated by financial markets in India and abroad,? Reddy said.