June inflation hits eight-month high but rate cut still possible

reuters

Business, Economy

Core consumer inflation, which strips out food and fuel prices, was estimated at an annual 4.09-4.11 per cent in June.

Inflation has come down sharply from a peak of more than 12 per cent in 2013, and was below the RBI 4 per cent target.

New Delhi: India’s retail inflation hit a eight-month high in June on higher food prices, but stayed below the central bank’s target, potentially giving it room for a further interest rate easing to boost slowing growth.

Annual retail inflation in June was 3.18 per cent, up from 3.05 per cent the previous month, but below analyst forecasts, government data showed on Friday.

A Reuters poll had predicted retail inflation at 3.20 per cent for June.

Core consumer inflation, which strips out food and fuel prices, was estimated at an annual 4.09-4.11 per cent in June, marginally lower than May’s 4.1-4.2 per cent, according to three analysts after seeing the inflation figures released on Friday.

“Food inflation trend is upwards while core is downwards, so the overall outlook on inflation is benign. The RBI will continue to maintain its accommodative stance and could do another 25-50 basis points rate cuts in this financial year,” said Sujan Hajra, chief economist at Anand Rathi Securities.

Inflation has come down sharply from a peak of more than 12 per cent in 2013, and was below the Reserve Bank of India’s (RBI) 4 per cent target for the eleventh consecutive month.

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