New Delhi, May 11: Falling food prices notwithstanding, consumer inflation will remain high during the current fiscal because of the high cost of housing and services as well as the increasing inflationary pressures from smaller cities, Goldman Sachs said in a report on Tuesday.
Goldman’s research arm said in a report that inflation, based on consumer price index for industrial workers (CPI-IW) that includes services and housing costs, is already running at double-digits across almost all cities and has picked up rapidly in the smaller ones.
The report further pointed out that since last June housing costs have risen to an estimated 16 per cent now from four per cent at the end of 2008.
“We expect inflation to remain high and sticky through the year... even as the winter crops hit the market and ease food prices,” Goldman said, adding, “our city-by-city analysis of inflation shows that smaller cities are contributing more to inflation that the main metros.”
Goldman said it divided cities into large (with population over 5 million) and small (1-5 million) categories for its analysis, and found higher inflation in small cities because of broadbased recovery from the global crisis. — PTI