Expert views on June inflation data
India's wholesale price index (WPI) rose a lower-than-expected 7.25% in June from a year earlier, mainly driven by higher food prices, government data showed on Monday.
July 16, 2012 / 12:35 IST
India's wholesale price index (WPI) rose a lower-than-expected 7.25% in June from a year earlier, mainly driven by higher food prices, government data showed on Monday.
Analysts on average had expected an annual rise of 7.62%, a Reuters poll showed. Wholesale prices provisionally rose 7.55% in May.The annual reading for April was upwardly revised to 7.5% from 7.23%, the government said in the release.COMMENTARYSUJAN HAZRA, CHIEF ECONOMIST, ANAND RATHI SECURITIES, MUMBAI"Despite the unexpectedly low number, the headline inflation is way above the Reserve Bank of India's comfort zone. Hence, the case for easing of monetary policy is not there. The focus of the RBI will remain on improving liquidity."BACKGROUND- Industrial output picked up more than expected in May, bolstering the case for the central bank to keep interest rates high at its next policy meeting as a slow start to the monsoon puts pressure on inflation, especially food prices.- The nearly USD 2 trillion economy expanded 5.3% in the March quarter, its slowest pace in nine years, on a combination of mounting global uncertainties, muddled policies, high inflation and steep interest rates at home.- Factories stepped up production and hired workers in June at the fastest rate in more than two years, a business survey showed.- Car sales in June grew 8.3% from a year earlier, but were the lowest in numbers since October last year, forcing the auto industry to lower the sales target for the current fiscal year.- Headline inflation accelerated in May to 7.55% as both food and fuel prices picked up. Consumer price inflation, which is an indicator of retail price rises, was unchanged at 10.36% in May.- Monsoon rains were above average for the week ended July 11 for the first time in the current season as the downpours resumed after a worrying fortnight-long pause over the central part of the country. The annual rains are crucial for farm output and economic growth as about 55% of the South Asian nation's arable land is rain-fed.Also ReadJune inflation slows to 7.25% YoY Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
