Wholesale inflation up 1.62% in June; watch out for further spikes ahead

India's wholesale prices rose at a faster-than-expected pace in June, gaining 1.62 percent from a year earlier on higher food prices, government data showed on Thursday.

The data compared with a 1.19 percent annual rise forecast by economists in a Reuters poll. In May, prices rose a provisional 0.79 percent.



Wholesale food prices last month rose 8.18 percent year-on-year, compared with a provisional 7.88 percent gain in May.

“The rise in wholesale price inflation is in line with expectations and is essentially on the back of rising food prices along with some catch up in commodity prices," said Richa Gupta, senior economist, Deloitte India.

She sees vegetable prices continuing to witness a rising trend for another couple of months, which is in line with seasonal patterns. The prices saw a 17.09 percent rising during the month.

She pointed out that energy prices have moved up, which is a reflection of the rise in global crude oil prices.

The fuel and power inflation has been inching up over the last six months from (-)9.89 percent in January to (-)3.62 percent in June. The crude oil price during in January stood at $28 per barrel while in June it was at $44.

"Going ahead, expect inflation to move up further from current levels but remain capped on the back of subdued global commodity prices. The key would be effective management of the food markets to avoid any spikes in food inflation,” Gupta said.

With Reuters

Updated Date: Jul 14, 2016 15:20 PM

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