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Retail inflation spurts again after three months of easing; jumps to 9.87% in June

15 Jul 2013 Evaluate

After slowing for three consecutive months, India's annual consumer price inflation (CPI) picked up in June to 9.87% from 9.31% in the previous month, on the back of costlier vegetables and food items. Meanwhile, CPI numbers for rural, urban and combined stood at 132.1, 130.5 and 131.4 respectively. The corresponding provisional inflation rates for rural and urban areas for June 2013 stood at 9.63% and 10.13% respectively.

The food inflation in June also rose to 11.84% from 10.65% in the previous month. The steepest rise was witnessed in vegetables prices which soared 14.55% in month over the year-ago period. Prices of fruits too witnessed a quantum leap. Protein rich items like egg, fish and meat too were costlier in June, though rates of pulses and related products somewhat eased. However, the rate of price rise in cereals and similar items basket was higher at 17.59%, as against 16.29% in May.

A higher CPI reading for June has further dampened hopes of a policy rate cut by the Reserve Bank of India this month end. Although, Retail inflation is not the main gauge for inflation in India, it could still have some persuasive value among policymakers and with the downward spiral of rupee, the RBI is likely to keep the policy rates unchanged despite contraction in factory output in May.

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