June retail inflation falls to 29 month low of 7.31%, but monsoon worries persist After a lower wholesale price index earlier in the day, data released by the government revealed that Indias consumer price index was also found to have fallen to 7.31 percent as compared to 8.28 percent in May. This is the lowest consumer price index since January 2012, reported CNBC-TV18. However, economists cautioned that a poor monsoon could significantly hit food inflation. The turmoil in Iraq has also increased the possibility of risk of rising food and fuel prices. Food price inflation fell from 7.97 percent from 9.56 percent in May while rural inflation rate was at 7.72 percent as compared to 8.86 percent as compared to May. Vegetable price inflation was found to have fallen from 8.73 percent vs 15.27 in May. We are dealing with past data. The fear is that the monsoon is yet to pick up, reservoir levels are down and sowing is inadequate... What happens between now and then is crucial, Samiran Chakraborty, head of research at Standard Chartered told CNBC-TV18. A Reuters poll had suggested consumer price inflation probably eased to 7.95 percent last month, down from Mays 8.28 percent. WPI and CPI are coming down and markets will expect inflation pressure to come down going forward. If this continues, it will be well received by market, Arun Kaul, CMD of UCO Bank told CNBC-TV18. Government data released today showed that Wholesale Price Index eased to a four-month low of 5.43 percent from a five-month high of 6.01 percent in May 2014. Data on Friday showed Index of Industrial Production (IIP), or factory output, in May rose 4.7 percent hitting a 19-month high. This is an absolute turnaround from the gloom of the previous May, when the index was a a negative 2.5 percent. The Reserve Bank of India - which considers both inflation indicators to make monetary policy decisions - has raised policy rates three times since September. However, with economic growth at historically low levels, RBI Governor Raghuram Rajan has kept the repo rate on hold since February. Economists are hoping that lower inflation numbers could help him change his stance. With inputs from Reuters
Posted on: Mon, 14 Jul 2014 12:54:19 +0000
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