Bangalore: Of India retail inflation June is likely to remain stable but well above the Reserve Bank of India’s tolerance limit for the sixth month as lower fuel and cooking oil prices offset higher services and food costs, a Reuters survey found.
Despite a significant recent increase in food prices, overall is growing at the fastest pace in nearly two years inflation This was partially controlled after the government cut taxes on petrol and diesel and banned food exports.
But most economists warned that the near-term outlook was highly uncertain as a heatwave last month pushed up vegetable prices. The government has also cut wheat production estimates due to drought in North India.
A Reuters poll of 42 economists on 4-8 July showed inflation as measured by consumer price Index (CPI) stood at 7.03% yearly in June, up from 7.04% in May. Forecasts for the data, due at 1200 GMT on Thursday, were in the range of 6.45%-7.70%.
If realized, inflation will be above 7% for the third consecutive month and above the RBI’s upper tolerance target of 6% for the sixth month.
Rahul Bajoria, India’s chief economist at Barclays, said, “While many goods and services categories are likely to report higher inflation in June, fiscal measures taken by the government will help prop up domestic prices in food and other sectors. ” ,
“Still, the cost of services is running high, and a passthrough is evident from higher commodity prices in many regions.”
The Reserve Bank of India (RBI) has hiked interest rates by 90 basis points to 4.9% so far this year and is set to add more in the coming months. RBI Governor Shaktikanta Das said recently that inflation was unlikely to fall within the top end of its mandated target band till December.
wholesale price inflation The survey showed that May’s three-decade high of 15.88% to 15.50% was only marginally seen.
While consumer price inflation appears to be stabilizing, higher global crude oil prices led to broader trade and the current account deficit pushed the rupee to a record low of $79.375 recently, raising concerns over higher imported inflation.
A recent Reuters poll asking a separate question what the rupee’s lowest point against the dollar would be during the next three months gave an average of 80 with a range of 79.50-85.00/$.
Despite a significant recent increase in food prices, overall is growing at the fastest pace in nearly two years inflation This was partially controlled after the government cut taxes on petrol and diesel and banned food exports.
But most economists warned that the near-term outlook was highly uncertain as a heatwave last month pushed up vegetable prices. The government has also cut wheat production estimates due to drought in North India.
A Reuters poll of 42 economists on 4-8 July showed inflation as measured by consumer price Index (CPI) stood at 7.03% yearly in June, up from 7.04% in May. Forecasts for the data, due at 1200 GMT on Thursday, were in the range of 6.45%-7.70%.
If realized, inflation will be above 7% for the third consecutive month and above the RBI’s upper tolerance target of 6% for the sixth month.
Rahul Bajoria, India’s chief economist at Barclays, said, “While many goods and services categories are likely to report higher inflation in June, fiscal measures taken by the government will help prop up domestic prices in food and other sectors. ” ,
“Still, the cost of services is running high, and a passthrough is evident from higher commodity prices in many regions.”
The Reserve Bank of India (RBI) has hiked interest rates by 90 basis points to 4.9% so far this year and is set to add more in the coming months. RBI Governor Shaktikanta Das said recently that inflation was unlikely to fall within the top end of its mandated target band till December.
wholesale price inflation The survey showed that May’s three-decade high of 15.88% to 15.50% was only marginally seen.
While consumer price inflation appears to be stabilizing, higher global crude oil prices led to broader trade and the current account deficit pushed the rupee to a record low of $79.375 recently, raising concerns over higher imported inflation.
A recent Reuters poll asking a separate question what the rupee’s lowest point against the dollar would be during the next three months gave an average of 80 with a range of 79.50-85.00/$.