Retail inflation in India stood firm on the back of sticky food prices while industrial output growth showed some faint signs of revival in May complicating the policy choice for the Reserve Bank of India which has raised concerns about inflationary pressures in the economy.
Data released by the Central Statistics Office showed inflation measured by the consumer price index rose an annual 5.8 per cent similar to the levels seen in May, as prices of vegetables and pulses remained robust. The June data was a 22-month high for retail inflation as food prices exerted pressure. Food inflation rose an annual 7.8 per cent in June, compared to 7.5 per cent in May. Prices of pulses rose an annual 26.6 per cent in May while vegetables rose 14.7 per cent year on year. Aditi Nayar, senior economist at ICRA said, "The next print for CPI inflation is expected to remain elevated, before a combination of a favourable base effect, progress of monsoon and sowing as well as lower temperatures help to dampen food inflation."
Other data showed industrial output growth in May rise an annual 1.2 per cent from the previous month's downwardly revised 1.3 per cent decline. The data also revealed that pressure points still exist in the sector. During April to May, the sector contracted 0.1 per cent as compared to an expansion of 2.8 per cent in the year period. The April revision was sharper than the provisional contraction of 0.8 per cent. The manufacturing sector rose an annual 0.7 per cent in May from the 2.1 per cent growth in May 2015 while electricity grew an annual 4.7 per cent against a 6 per cent growth in the year earlier period.
