Good news, and bad for Indian economy, Industrial output rises even as inflation surges to 4-month high

Good news, and bad for Indian economy, Industrial output rises even as inflation surges to 4-month high

India News

CPI inflation jumped further in May to a four-month high to 4.87 percent as compared to 4.58 percent of the previous month, government data showed on Tuesday, driven by higher fuel prices and a depreciating rupee. While April IIP came at 4.9 percent for this month as compared to 4.4 percent of the previous month. Reuters poll of more than 30 economists taken 4-8 June showed annual consumer price inflation likely increased to 4.83% in May, the highest since January and above April’s 4.58%.CPI inflation in April inched upward to 4.58% compared to 4.28% in March, 4.44% in February, and is moving towards 5.07% mark recorded in January 2018. Last year, CPI hovered near 2% to below 5%.In May last year, it was 2.18 per cent. As per the data of the Central Statistics Office (CSO), food inflation rose to 3.10 per cent last month, as against 2.8 per cent in April. The price data is collected from selected towns by the Field Operations Division of NSSO and from selected villages by the Department of Posts. The data is received through web portals, maintained by the National Informatics Centre.Mounting price pressure is a concern for the RBI, with its own projections for inflation raised compared with the ones made in May.On 6 June, the Reserve Bank of India (RBI) raised the repo rate for the first time since 2014, by 25 basis points to 6.25%, as recent data showed significant increases for both inflation and growth. But the central bank kept its “neutral” policy stance unchanged.The RBI revised up its inflation forecast to 4.7 percent for the second half of the fiscal year ending in March 2019, from the 4.4 percent it projected earlier.