Reuters
New Delhi, Jun 27: India's wholesale price index rose 11.42 percent in the 12 months to June 14, above the previous week's annual rise of 11.05 percent, data showed on Friday.
The rate was above a median forecast of 11.18 percent in a Reuters poll of analysts and was the highest inflation rate in more than 13 years.
Key points
Sub-index (Weighting) June 14 June 7 Pct change
Primary Articles (22.025) 243.0 242.5 +0.2
Food articles (15.402) 232.1 231.6 +0.2
Non-food articles (6.138) 238.0 239.2 -0.5
Minerals 652.6 630.1 +3.6
Fuel, power, light
And lubricants (14.226) 374.7 374.2 +0.1
Manufactured products (63.749) 202.8 201.6 +0.6
Food Products (11.538) 208.8 207.4 +0.7
[Note: Articles in CAPITALS are sub-indices. Articles in lower case are specific categories within the sub-indices.]
- The inflation rate is the highest since at least April 1995, when annual numbers in the current inflation series first became available.
- Inflation for the week ended April 19 was revised up to 8.23 percent from 7.57 percent.
- The annual inflation rate was 4.13 percent during the corresponding week of the previous year.
- The wholesale price index stood at 236.1 points in the week ended June 14.
Commentary
A. Prasanna, Economist AT ICICI Securities, Mumbai:
"We expect inflation to head higher in the coming months and peak somewhere between 12 to 13 percent. Inflation will remain in double digits until the end of the calendar year. In order to reinforce its policy stance, the RBI will hike rates in the course of the year."
Market reaction
The yield on the benchmark 10-year bond was at 8.61 percent, down 4 basis points from before the data.
The partially convertible rupee strengthened slightly to 42.78/79 per dollar.
Background
- The Reserve Bank of India on Tuesday raised its key lending rate by 50 basis points to 8.5 percent, its highest in six years, and hiked banks' reserve requirements, also by 50 basis points, in an aggressive move to combat inflation.
- It was the second increase in the repo rate this month after fuel prices were raised by about 10 percent on June 4, and the Reserve Bank signalled it would act again if required.
- Inflation had shot above 11 percent in early June to a 13-year high following a hike in fuel prices, rattling markets and prompting Finance Minister Palaniappan Chidambaram to warn of stronger anti-inflation measures ahead.
- Chidambaram said on Thursday he expects headline inflation to stay in double digits for some weeks and begin to moderate in three months.
- The government has cut import duties on a range of commodities and enforced some export bans to boost supplies and lower prices.
(Additional reporting by V. Ramakrishnan, Saikat Chatterjee and Swati Bhat in Mumbai and Rajkumar Ray in New Delhi).