PTI

New Delhi, Jun 13: Inflation reached a seven-year high of 8.75 per cent mainly due to rising prices of food articles and vegetable, amid fears that the recent increase in fuel prices would push it past 9 per cent.

The latest figures for the week ending May 31 put the inflation 0.51 per cent more than what was recorded in the preceding week, bringing new worries to the 'aam admi', even as economists warn that "worst is yet to come".

Inflation would touch the highest point of 21st century and move into double digit once the recent hike in fuel prices are captured, HDFC Bank Chief Economist Abheek Barua said.

The rising prices of milk, pulses, spices, fruit and vegetables continued to pose a major challenge before the Manmohan Singh government in an election year, even as Finance Ministry in tandem with the Reserve Bank of India pursued tough policy and monetary measures to tame inflation.

The previous high as per the final figure was recorded at 8.77 per cent for the week ended February 10, 2001.

According to Crisil Principal Economist D K Joshi, inflation in the coming weeks will go up because of the fuel price hike and some base effect.

The Reserve Bank decision to increase short-term lending rate will not have any impact on the current inflation but may help in curbing future expectations in the medium term, he said.

As part of inflation control measures, the RBI had on Wednesday increased the interest rate on its short-term lending to bank by 0.25 per cent to eight per cent.