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Fuel Prices Drive up Inflation to Five-Month High in June; Industrial Production Slows

News18.com
June was the eighth straight month in which inflation was higher than the central bank's medium-term target of 4 percent.

New Delhi: India's retail inflation rate accelerated to a five-month high of 5.0 percent in June, government data showed on Thursday, driven by higher fuel prices and a depreciating rupee.

Analysts polled by Reuters had forecast June's annual increase in the consumer price index at 5.30 percent, compared with May's 4.87 percent. The forecasts for June ranged from 4.60 percent to 6.00 percent.

June was the eighth straight month in which inflation was higher than the central bank's medium-term target of 4 percent.

Thursday's CPI data cements expectations of a hike in key interest rates by the central bank as early as August. The Reserve Bank of India (RBI) last month raised its benchmark interest rate for the first time since 2014, by 25 basis points to 6.25 percent, citing rising inflation.

India's industrial output, on the other hand, slipped to 3.2 percent in May from 4.9 percent in the previous month. Economists surveyed by Reuters had forecast 5.2 percent growth in output compared with a 4.9 percent year-over-year increase in April.

Manufacturing, which contributes 78 percent of industrial output, grew 2.8 percent in May, slower than a 5.2 percent rise in April, as domestic demand slowed.