India’s Headline Inflation slowed to 7.25 percent in June 2012

According to the Wholesale Price Inflation (WPI) data released by the Ministry of Commerce and Industry on 16 June 2012, India’s headline inflation in the month of June 2012 slowed to 7.25 percent, marking the lowest in the last five months. The inflation figure stood at 7.55 per cent in May 2012, while at 9.51 percent during the corresponding month of 2011. The government revised the inflation figure for the month of April 2012 to 7.50 percent from earlier 7.23 percent.

Food Inflation, however, did not show any restraint as it stubbornly stood in double digit zone. The food inflation for the month of June 2012 stood at 10.81 percent as compared to 10.74 percent in May 2012. The persistent high food inflation left RBI with very little room to consider any policy rate cut in its upcoming monetary policy review.

Annual fuel inflation at 10.27 per cent in June 2012, showed a little moderation as it stood at 11.53 percent during the same period in 2011. The persistent decline in the value of Indian rupee in the global currency market has not let the fuel prices in India come down, despite the global fuel prices dropped significantly.

RBI is set to review its quarterly monetary policy on 31 July 2012, though any decision on change in policy rates is unlikely unless the inflation remains above the comfort level of the common man of the country. The Central Bank in its mid-quarterly review of monetary policy on 18 June 2012 had left various key policy rates unchanged.