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India's retail inflation hits 8-month high in June

A vegetables shop is pictured at a market area in Mumbai, India. Photograph:( Reuters )

Reuters Mumbai, Maharashtra, India Jul 12, 2019, 06.11 PM (IST)

India's retail inflation rate hit an eight-month high in June on higher food prices, government data showed on Friday, but stayed below the central bank's medium-term target of 4% for an eleventh straight month. Annual retail inflation in June was 3.18%, up from 3.05% in the previous month, but below analyst forecasts.

A Reuters poll had predicted a retail inflation rate of 3.20% for June.

Meanwhile, data showed the country's industrial output climbed 3.1% in May from a year earlier, but lagged forecast.

"CPI inflation has come in much below market expectations despite sequential spikes in the prices of vegetables, pulses, edible oils, etc. This is primarily on account of a crash in core inflation from 4.25% in May to 4.11% in June. This reflects underlying weakness in demand and is supportive of the RBI's easy monetary policy stance," said Rupa Rege Nitsure, Chief Economist, L&T Financial. 

"Weaknesses in manufacturing activity, especially in capital goods and consumer durable goods production, is weighing on industrial growth," he added. 

"The broad trend is that consumer price inflation remains rangebound. The food inflation trend is upwards, while the core is downwards, so the overall outlook on inflation is benign. The RBI will continue to maintain its accommodative stance and could do another 25-50 basis point rate cuts in this financial year," said Sujan Hajra, Chief Economist, Anand Rathi Securities.