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CARE Ratings report on WPI for May14

With RBI focus on inflation control a cut in interest rates is unlikely in the forthcoming monetary policy meet, CARE says

June 16, 2014 5:06 IST | India Infoline News Service
Inflation pressures for the country re-emerged in May. Inflation in May14 measured by the wholesale price index (WPI) increased higher than anticipated to 6% (y-o-y), largely driven by higher food and fuel prices.
Food inflation jumped to 9.5% as against 8.3% in May13. The price increases in potatoes, fruits, and the protein complex (egg, meat & fish) largely accounted for the rise in food inflation during the month.
The Fuel and power segment saw prices rise 10.5% during the month compared with the 8.9% increase a month ago and 7.3% price rise in May13.
Manufactured products inflation was fairly steady at 3.6% in May14, compared with the 3.3% increase in May13.
Indias vulnerability to an increase in inflation in coming months has increased on account of higher oil prices with the escalation in geo-political tensions (the sectarian unrest in Iraq has led to oil prices rising to 9 month highs) and the subnormal monsoons thus far (48% below normal) faced by the country.
With RBI focus on inflation control a cut in interest rates is unlikely in the forthcoming monetary policy meet.

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