Inflation

Retail inflation in June hit 7.31%, the lowest level seen since the new measures was introduced in January 2012, while the wholesale price-based index (WPI) was at four-month low of 5.43%, mainly due to because of easing prices of vegetables.
The RBI had in the past put its comfort zone for WPI-based inflation at 4.5-5%, but has now given it up for Consumer Price Index (CPI), which it believes is a better measure. The central bank had said that it is targeting 8% retail inflation by next January . Although the RBI had earlier indicated that it may consider cutting rates if the government came out with a credible fiscal consolidation plan and inflation cooled down, the chances now appear dim in the immediate future. The central bank will also take a note of better industrial growth figure of last week.
Just when there appeared to be some comfort, the deficient rains may play spoilsport.
The government is on high alert for several food products -ranging from potatoes and onions to rice and milk -to ensure that prices remain under check as weak rains may affect production and result in a spike.
Apart from weak rains, there is also the fear of a rise in oil prices given the problems in Iraq.