India’s retail inflation moves up to 5% in June

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

New Delhi: India’s retail inflation rate accelerated to a five-month high of 5.0% 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%, compared with May’s 4.87%.

The forecasts for June ranged from 4.60% to 6.00%. June was the eighth straight month in which inflation was higher than the central bank’s medium-term target of 4%.

Consumer durables and Consumer non-durables recorded growth of 4.3% and (-) 2.6% respectively in May.

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%, citing rising inflation.

States slip on fiscal targets on farm loan waivers, GST: RBI

  • Higher expenditure on salaries and farm loan waivers, coupled with a revenue shortfall on GST implementation, led to a slippage of 0.35% in states’ fiscal targets to 3.1% in 2017-18, the RBI said.
  • This is the third consecutive year where the states have failed to meet their gross fiscal deficit (GFD) target, the central bank said, adding this comes despite expectations of an improvement.
  • For FY19, states are hoping for a 0.2% revenue surplus as against a revenue deficit of 0.4% as per the revised estimates, which will lead to an overall GFD of 2.6%, against 3.1% in FY18.

Industrial production grows at 3.2%

  • Industrial production grew at 3.2% in May compared to 2.9% in the same month last year even as the performance of manufacturing and power sectors remained sluggish.
  • The output of mining, manufacturing and electricity sectors grew by 5.7%, 2.8% and 4.2% respectively in May 2018 compared to May 2017.
  • The cumulative growth in these three sectors during April-May 2018 over the corresponding period of 2017 has been 4.9%, 4% and 3.1% respectively.
  • In terms of industries, 13 out of 23 industry groups in the MFG sector have shown positive growth during May 2018 as compared to the corresponding month of the previous year.
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