New Delhi:The wholesale price index (WPI)-based inflation fell to a four-month low of 5.43% in June against 6.01% in the previous month as the rate of food price rise declined and ironically onions turned cheaper.
Prime Minister Narendra Modi, elected in May amid anger over persistently high inflation, particularly food inflation, has ordered a crackdown on hoarding to hold down food prices and set limits on the export of staples, such as onions and potatoes.
While those measures helped cool food inflation to 8.14 percent in June from 9.50 percent the previous month, vegetable prices still recorded a double-digit gain during the month. Adding to inflationary worries are prospects of a first drought in five years and turmoil in Iraq, which have increased the risk of a run-up in food and fuel prices.
Weak rainfall in India since the monsoon season started last month has already driven up prices of basic food items, such as milk, potatoes and tomatoes and could further delay a decision by the RBI to cut interest rates and ease the flow of credit to the economy.
Economists in a Reuters poll forecast that consumer price inflation probably eased to 7.95 percent last month, down from 8.28 percent in May. The government will release the consumer price data at 5:30 p.m.
A flare-up in global crude prices also runs the risk of aggravating India`s inflationary woes as the country imports nearly 80 percent of its oil. Brent crude bounced off of three-month lows on Monday to stand above $106 a barrel on fears of supply disruptions amid new and continuing violence in Libya and Iraq.
Bureau Report
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