22.8.12

Retail Inflation



Retail inflation eased marginally in July on the back of moderating fuel prices but food inflation remained in double digits and erratic monsoon rains in some parts of the country may heighten the pressure and pose a policy challenge in the months ahead.
Data released by the Central Statistics Office showed the annual inflation rate based on the consumer price index for July stood at 9.86% compared to 9.93% in June.
The inflation rates for rural and urban areas for July were 9.76% and 10.10% while final rates for rural and urban areas for June were 9.65% and 10.44%.
Inflation based on the wholesale price index has also displayed some signs of easing in July. Latest data shows it eased to 6.87% from the previous month’s 7.25% but the data also showed that food prices continued to remain under pressure.
Price of pulses rose an annual 12.5% in July across the country and in urban areas the increase was faster at an annual 16.21%, according to the CPI data.
Vegetables prices rose an annual 27.33% in July while prices of oils and fats shot up 17.37% year-on-year across the country. Eggs, fish and meat also sustained their increase rising an annual 11.11% at the combined level.
Economists say drought in some states may impact food prices and lack of progress in easing supply side pressures could lead to a sharp spike in food prices.
Stubborn food prices have remained a policy challenge for the government and several experts have called for urgent measures to tackle the problem.
Expectations for an interest rate cut is likely to gather pace with two sets of inflation data pointing to some easing but the underlying inflationary pressures, the gloomy global economic scenario and rising crude oil prices may make the central bank’s task of easing tight monetary policy complicated.

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