Inflation hits 4-month high at 4.58%
NEWDELHI: Consumer price inflation accelerated at the fastest pace in four months in May, driven by higher fuel prices and a depreciating rupee, official data released on Tuesday showed, reinforcing the possibility of another interest rate increase by the Reserve Bank of India (RBI) in August.
India’s annual retail inflation quickened in May to 4.87%, from April’s 4.58%.
Fuel prices have increased in line with rising crude oil prices. A depreciating rupee makes imported goods more expensive. Analysts polled by Reuters had forecast May’s inflation rate, measured by the Consumer Price Index, at 4.83%.
Even core inflation, which excludes often volatile food and fuel prices, quickened to 5.95% in May from 5.7% in April, mirroring higher prices of manufactured goods.
So far in 2018, retail prices of petrol have climbed 9.2% and diesel by 13.7% in Delhi.
The rupee has depreciated 5.3% against the dollar since January 1, pushing up the prices of imported items such as electronic goods and machinery.
Industrial output grew 4.9% in April compared to a fivemonth low of 4.4% in March, a separate data set released by the government showed. Economists had forecast output growth of 5.2%.
The monetary policy committee of the RBI, which is targeting a medium-term inflation rate of 4%, on June 6 raised the key repurchase rate, at which it lends money to commercial banks, by 0.25% to 6.25%.