Retail Inflation Rises to a 5-Month High in June; IIP Moderates

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    Aided by buoyant oil and housing prices, India's retail inflation rose to a 5-month in June. The consumer price inflation (CPI) was at 5 percent in June from 4.87 percent in May, as per the data released by Central Statistics Office (CSO) today.

    Retail Inflation Rises to a 5-Month High in June; IIP Moderates

    The index of industrial production (IIP) on the other hand increased at a rate 3.2 percent year-on-year (YoY) in the month of May, compared to a higher revised 4.8 percent in April, according to the data released by the Ministry of Statistics and Programme Implementation.

    It indicates a sharp decline in industrial activity declined sharply in May mainly from the moderation in the pace of manufacturing activity, which caught up in April.

    The MPC (Monetary Planning Committee) had raised benchmark interest rates in its June policy meet for the first time in four years citing inflationary risks, especially from higher global oil prices. The committee had also factored in "abrupt acceleration" in core inflation as an added pressure to the rising rates in fuel in food and fuel, in the minutes of the June 6 meeting. The June results have economists expecting another rate hike for 2018-19.

    Meanwhile, according to the IIP data released today, 13 out of the 23 industry groups in the manufacturing sector showed positive growth for the month of May 2018, in comparison to last year. Production of primary goods rose by 5.7 percent, while the output of capital goods advanced by 7.6 percent.

    Further, the manufacturing sector grew by 2.8 percent in output for the month of May compared to a 5.2 percent rise in April. Meanwhile, electricity generation rose 4.2 percent from a 2.1 percent increase in April.
    In the mining activity a 5.7 percent rise was seen compared to 5.1 percent growth in April.

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