【New Delhi】Aided by lower cereal prices, retail as well as wholesale price index (WPI) based inflation came in at lower-than-expected levels for June, signalling that better days may be round the corner for the inflation battered common man.
This could ease pressure on Reserve Bank of India Governor Raghuram Rajan on the policy rates front. The economy is on course for below-8 per cent inflation this fiscal year, Rajan had said on July 10, the day the Budget was announced.
○CPI-based inflation 7.31 per cent in June
【New Delhi】Cereals have a higher weightage in consumer Price Index (CPI)-based inflation, which fell to 7.31 per cent in June, the lowest since its launch in January 2012. The figure for June 2013 was 9.87 per cent.
Even so, experts felt the Reserve Bank of India was likely to keep rates as they are in its policy review next month, given the fear of a sub-normal monsoon and geopolitical uncertainty.
○Core inflation pressures remain
【New Delhi】India's Wholesale Price Index-based (WPI) inflation fell to a four-month low of 5.43 per cent in June from six per cent in May.
While the fall in inflation came from lower food and fuel inflation, the manufacturing inflation in fact edged up slightly.
A decline in inflation in foodgrain, fruit and vegetables, egg, meat and fish drove food inflation down to 8.1 per cent in June from 9.5 per cent in May. Fuel inflation also fell by 1.5 percentage points to nine per cent, as petrol prices fell from the 28-month high seen last month. A part of the fall seen in both food and fuel inflation was also due to the strong base effect from the same month last year.
The non-food manufacturing inflation - the Reserve Bank of India (RBI)'s measure of core inflation - edged up to 3.9 per cent in June from 3.8 per cent in May. Core inflation captures demand-side pressures on prices and is expected to rise as the economy grows.
Industrial production for May (4.6 per cent year-on-year growth) signals that the economy is witnessing green shoots of recovery. As the growth recovers, price pressures across several manufacturing categories such as beverages, textiles, chemicals and machinery and machine tools will rise further.
○Sensex surges 222 points as inflation eases
【Mumbai】After easing of the whole sale price index to the lowest level in the last few months, Sensex gained 222 points on Monday due to revival of buying by funds and retail investors who hoped that the fall in inflation might lead to cut in key bank rates in the coming policy review.
The benchmark index closing at 25,229 on Monday against the previous close of 25,007. In NSE, Nifty was up 72 points at 7,527.
【News source】
Retail, wholesale inflation cools in June as cereal prices dip
Inflation eases in June
Core inflation pressures remain
Sensex surges 222 points; consumer durables, bank stocks major gainers
Sensex rebounds 188 pts in early trade on easing inflation
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