"Once fuel price hike is reflected in the index, the rate may go up to 10 per cent," HDFC Bank chief economist Abheek Barua told PTI.
The government increased the prices of petrol by Rs 5 per litre, diesel by Rs 3 a litre and domestic cooking gas by Rs 50 a cylinder with effect from June 5.
According to Petroleum Secretary M S Srinivasan, the hike could lead to about 0.5-0.6 per cent rise in inflation rate.
The impact of the fuel price hike will be reflected in the inflation data to be released next week. Inflation rate has already touched 8.75 per cent, the highest level witnessed during the UPA regime. The previous high of 8.77 per cent was recorded in February 2001.
Apart from supply constraints, Barua said the increased domestic demand was adding to the inflationary pressure."The current inflation rate was not only supply driven but domestic demand pressures have also started building up," he said.
Similar views were expressed by Crisil principal economist D K Joshi, who said that inflation in the coming weeks will go up because of the fuel price hike and also on account of base effect.
As regards the Reserve Bank's recent decision to increase short-term lending rate to check price rise, he said it is aimed at containing future demand and may not have any effect on the current inflation.
NCAER senior fellow Shashanka Bhide said inflation is expected to remain high for some weeks and impact of fuel price hike would be witnessed in the figures for the next week.
The inflation rate, he added, would come down in August, "this seems to be the peak level." Assocham president Sajjan Jindal said inflation would decline to a comfortable level after inching up a little bit in the coming weeks.
Jindal attributed high inflation to factors like rising crude prices in the international market, increased borrowing and input cost.
According to Lotus India AMC head business development Rajiv V Shastri, inflation would touch double digit in the next six weeks or so when the cascading effect of Rs 3 per litre price hike of diesel would come into full force. The price rise is hitting the poor harder than the others, he added.