India's wholesale price inflation slowed unexpectedly in June to the lowest in five months on slowing fuel costs, yet remained above the central bank's comfort level, official data showed Monday.
Inflation, based on the wholesale price index, fell to 7.25 percent from 7.55 percent in May, the Ministry of Commerce and Industry said. Economists had expected the rate to accelerate to 7.61 percent. Overall wholesale prices rose only 0.18 percent in June from a month ago.
Food inflation rose to 10.81 percent from 10.74 percent. Fuel and power prices rose at a slower pace of 10.27 percent after increasing 11.53 percent in May. Likewise, primary article inflation slowed to 10.46 percent from 10.88 percent.
Manufactured goods inflation remained at 5 percent. Prices of non-food articles gained 6.85 percent, slower than the 8.47 percent increase seen in May.
Although the economy is undergoing a weak growth pace, the Reserve Bank of India is seen holding the key interest rates at the current levels, given high inflation figures and weak currency. The rate decision is due on July 31.
The central bank kept its key repo rate at 8 percent and reverse repo at 7 percent at its previous meeting in June, saying that another reduction could worsen the inflationary pressures amid the weakening economic growth.
According to S&P, India may become the first nation among the BRIC to lose its investment grade. The country has the fastest inflation in the BRIC group of countries that comprises Brazil, Russia, India and China.
by RTT Staff Writer
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