By admin       2018-07-17

Ahead of the Reserve Bank of India’s (RBI) monetary review next month, wholesale price inflation rose to a four and a half year high of 5.72 per cent in June, up from 4.43 per cent in May.A jump in fuel prices, along with a continuing uptick in food inflation, led to a rise for a fifth month in a row. This raises pressure on the RBI to raise its policy rate (repo) of interest, experts said. The RBI had raised it by 25 basis points (bps) last month.Higher prices of fuel and food have been a factor for five months. In addition, figures released on Monday by the commerce and industry ministry showed rising prices across all major categories picked up pace in June, to contribute to a higher reading of the Wholesale Price Index (WPI). “We expect the RBI to remain cautious and possibly deliver another 25 bps rate hike in August, given the risks of (1) further broad-based increase in core inflation, (2) impact of minimum support price (MSP, for major crops) hikes, and (3) lower crop production, given the progress of the monsoon and sowing patterns,” went a report on inflation by Kotak Securities Research.The sharper than expected June rise in WPI inflation reinforce the expectation of a repo rate hike at the August meeting of the monetary policy committee, agreed Aditi Nayar, principal economist at rating agency Icra. Retail inflation, as measured by the Consumer Price Index (CPI), was also at a five-month high in June of 5 per cent, up from 4.87 per cent in May.Within WPI, the price of both petrol and high-speed diesel rose in double-digit figures for a third straight month. Petrol rose in June by 17.45 per cent, up from 13.9 per cent in May; inflation in high-speed diesel accelerated to 21.63 per cent, from 17.34 per cent."The lagged impact of the spike in the (global) price of crude oil and an unfavourable base effect caused the year-on-year inflation for crude petroleum to double to 62.2 per cent, from 30.5 per cent in May," said Nayar.After a three-month fall, liquefied petroleum gas (cooking fuel) prices rose by nearly 20 per cent. As a result, inflation in the energy category rose to 16.18 per cent, from 11.22 per cent the previous month

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