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Consumer price index in India rose to 22-month high, a likely cause of concern in the Reserve Bank of India’s next policy meet in August. Also, investors are eagerly awaiting the nomination of Rajan’s successor whose term ends on September 3 this year.
Consumer prices rose 5.77 percent in June from a year earlier after a 5.76 percent increase in May, the Statistics Ministry said in a statement on Tuesday. The median of 29 estimates in a Bloomberg survey of economists had predicted a 5.79 percent gain. Industrial production rose 1.2 percent in May compared with an estimated 0.3 percent decline.
The consumer food price index rose 7.79 percent in June from a year earlier, after a 7.47 percent increase the previous month. That was led by a 27 percent surge in the cost of pulses, while sugar and confectionery rose 17 percent, vegetables 15 percent while education costs rose 5.4 percent.
While Governor Raghuram Rajan aims at easing inflation to around 4 percent target, his deemed successor, Arvind Panagariya is a dove, who shall aim at spurring growth, sidelining inflation prospects. However, his apparent inheritor will remain key in determining whether the 4 percent target for 2018 remains.
On June 7, RBI left rates unchanged after sounding a note of caution on the spurt in CPI inflation. Rajan said the future trajectory of inflation somewhat "more uncertain" but hoped monsoon and food supply management will cool prices.
Meanwhile, the government will soon release the data for WPI inflation, which has risen to 0.34 percent in April after staying in negative zone for 17 straight months as global commodity prices started rising and India Inc regained some pricing power.
