Published on Mon, Jul 12, 2010 at 12:20 | Source : Reuters
Updated at Mon, Jul 12, 2010 at 13:01
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June wholesale inflation seen at 10.8%
Reuters Forecast: India's wholesale price index in June probably rose 10.8 percent from a year earlier, faster than a 10.16% rise in May. Forecasts from 20 economists ranged from 10% to 11.2%.
Reuters Forecast: India's wholesale price index in June probably rose 10.8% from a year earlier, faster than a 10.16% rise in May. Forecasts from 20 economists ranged from 10% to 11.2%.
Factors to watch: Headline inflation seen picking up following a rise in food and fuel prices.
The impact from an increase in state-set fuel prices announced on June 25 was seen as limited because the changes occurred late in the month. However, the price rises are expected to add around 1 percentage point to inflation.
Price pressures in manufacturing are seen increasing after world metal prices climbed last month.
The primary articles index, which measures areas including food and minerals, rose by 16.08% in the year to June 26, compared with 14.75% in the previous week, data last week showed.
Food prices are expected to fall in coming months both sequentially and from a year earlier as monsoon rains, slightly above normal levels in the week to July 7, help crop prospects.
Market Impact: The Reserve Bank of India (RBI), which had raised policy rates by 25 basis points in a surprise move earlier this month, is expected to continue with its 'calibrated' monetary tightening.
Market participants are pricing in another quarter point hike in key rates at the scheduled Reserve Bank of India review on July 27, taking the total increase to 1 percentage point since mid-March.
Traders said bond yields and overnight indexed swap rates may rise briefly if the headline inflation came in near 11%.
