New Delhi, July 14 (IANS) The recent fuel price hike drove India’s annual food inflation further up to 10.55 percent, from 10.16 percent in May, edging the Reserve bank of India closer to another hike in interest rates.
During June, prices of fuel rose 14.32 percent, reflecting the government’s decision to increase prices of petrol, diesel, kerosene and cooking gas in the last week of the month.
Prices of kerosene went up nine percent, lubricants six percent, liquefied petroleum gas three percent, petrol two percent and high speed diesel oil one percent.
However, the prices of aviation turbine fuel (6 percent), naphtha (5 percent), furnace oil (3 percent), and light diesel oil (1 percent) declined.
Manufactured products, which have a 63.75 percent weightage on the wholesale price index, also became costlier in June with the index of this group rising 0.2 percent.
The onset of monsoon has helped deflate the high food inflation as prices of food articles eased 14.6 percent in June, compared to 16.49 percent last month.
Despite repeated assurances from the government, the monthly wholesale price inflation has stood above the 10 percent mark in the last five months, following revision of the preliminary data.
April’s headline inflation was revised to 11.23 percent, from 9.59 percent reported earlier.
The Reserve Bank of India, which takes up the quarterly monetary policy review on July 27, will now have to juggle with interest rates to temper the high inflation, which has now spread from food prices to other sectors like metals.
The central bank has already raised rates thrice this year to combat high inflation.
‘I think although there will be an adjustment upward (in inflation) when fuel price hike gets fed in July numbers… I am not altering my conclusion that at the end of the year it will be low,’ said the Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia.
‘You will see more decline as time goes by,’ Ahluwalia added.