June retail inflation dips to 'historically low' 1.54%
Retail inflation hit a "historically low" level of 1.54 per cent in June on dip in food items like vegetables, pulses and milk products, which may prompt the Reserve Bank to go in for rate cut next month.
"The number of 1.54 per cent is historically low and reflects the firm and ongoing consolidation of macro economic stability," Chief Economic Adviser Arvind Subramanian told reporters.
"The last time we saw such inflation – according to slightly different CPI (IW) – was in 1999 and before that in August 1978," he added.
Subramanian said that a shift in inflationary process to low levels of inflation has been missed by all.
"Clearly, this low number and what it implies about underlying price pressures…is something that I am sure, all policy makers will reflect upon very very carefully," he said.
The latest series of Consumer Price Index (CPI) was introduced in January 2012.
Inflation in the previous month - May this year - was 2.18 per cent.
On the other hand, in June last year, it was 5.77 per cent.
The year-on-year CPI inflation eased sharply to a series-low 3.0 percent in April 2017, due to food inflation. Inflation numbers continued to plunge to lower levels through May and June.
As per the data released by Central Statistics Office, inflation in the food basket as a whole contracted further to 2.12 per cent last month as compared to (-)1.05 per cent in May. Vegetables inflation declined to 16.53 and that of pulses and products to 21.92 per cent.
There was decline in rate of price in eggs (-0.08 per cent). On the other hand, the protein rich meat and fish turned costlier as the inflation spiked to 3.49 per cent in June from 1.87 per cent in May.
Fruits too were dearer on monthly basis.
The retail inflation in the fuel and light segment slowed to 4.54 per cent as compared to 5.46 in May.
The Reserve Bank, which mainly factors in retail inflation to arrive at its monetary policy, is slated to meet in early August to announce the next bi-monthly policy rate.
In its last policy in June, the central bank had kept the key lending rate unchanged citing risk to inflation.
In India, retail inflation is linked to Consumer Price Index(CPI) which is managed by Ministry of Statistics.
May manufacturing slump lowers IIP growth to 1.7%
Industrial output growth slumped to 1.7 per cent in May from 8 per cent a year-ago due to poor performance of mining and manufacturing, and may put pressure on the RBI to cut interest rate in its policy next month.
The factory output growth, measured on the Index of Industrial Production (IIP), for April-May period decelerated to 2.3 per cent from 7.3 per cent in the same period last fiscal, as per the data released by the Central Statistics Office.
The data further revealed that output of the capital goods segment, considered as key indicator of investment, shrunk by 3.9 per cent compared to a high growth of 13.9 per cent recorded in May 2016.
The consumer durables segment too witnessed a decline.
While mining sector output declined by 0.9 per cent in May against 5.7 per cent growth in the year-ago month, the growth of manufacturing sector slowed to 1.2 per cent from 8.6 per cent in the same month last year.
However, electricity generation expanded by 8.7 per cent in May as against 6.1 per cent growth in the corresponding period last year. The Reserve Bank, which is slated to announce its bi-monthly monetary policy later next month, has kept the interest rate on hold citing risks to inflation.