Consumer Inflation Zooms To 5% In June; Factory Output Falls In May

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Retail inflation accelerated to a five-month high of 5 per cent in June, from 4.87 per cent in the previous month, official data showed on Thursday. Economists in a poll by news agency Reuters had expected retail inflation – also known as consumer inflation – at an annual 5.30 per cent. Surging fuel prices – triggered by the surge in crude oil prices during the period – weakness in the rupee against the US dollar led to the increase in inflation. Inflation remains above Reserve Bank of India’s medium-term target of 4 per cent target for an eighth month in a row.

Thursday’s CPI data cements expectations of a hike in key interest rates by the central bank as early as August. The RBI had last month announced a hike in repo rate – the rate at which it lends to commercial banks – by 25 basis points, or 0.25 per cent, marking the first increase in hike in more than four years.

Data released separately showed that factory activity growth, determined by Index of Industrial Production, slipped to 3.2 per cent in May, from 4.9 per cent in the previous month. A Reuters poll had forecast industrial output to increase at 5.2 per cent from a year earlier.

Growth in the manufacturing sector declined to 2.8 per cent, compared with 4 per cent in the previous month, data from the Ministry of Statistics showed.

Source: NDTV Profit