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The Consumer Price Index (CPI)-based inflation rose to nine-month high of 5.40 per cent in June, on the back of increased rate of price rise in food items, data released by the Ministry of Statistics and Programme Implementation (MoSPI) showed on Monday.
The CPI inflation for May 2015 was 5.01 per cent, while it had stood at 6.77 per cent in June 2014. MoSPI had released the new series of CPI with the base year of 2012 against earlier 2010 from January this year. However, back-dated data was released later for comparative analysis.
The data showed the CPI inflation was higher at 5.52 per cent in September, 2014 than the one released on Monday. In October, 2014, the rate of price rise was at 4.62 per cent and remained lower than 5.40 per cent till May, 2015.
The consumer food price index for June this year stood at 5.48 per cent, compared with 4.80 per cent last month, and 7.21 per cent for the corresponding period last year. Analysts surveyed by Bloomberg had predicted a CPI rise of 5.1 per cent for the month.
The data for June, and the consecutive rise in consumer price inflation since April, does justify Reserve Bank of India (RBI) Governor Raghuram Rajan’s cautiousness in cutting the policy rate. So far in this calendar year, Rajan has cut rates thrice, by 0.25 basis points each time, in a bid to spur investment, the last one being on June 2. There have been calls from policy hawks for deeper rate cuts.
June’s inflation was higher than the stimates and it conveyed the concerns which Rajan had flagged about food prices, said D K Joshi, chief economist with CRISIL. Joshi said the food prices showed a lagged effect from unseasonal rains in March and April in North India, which led to crop damage.
Since his last rate cut, Rajan has warned that he will not cut rates again this year, if poor rain drives up food prices even further.
