India's Wholesale Inflation Stays under 5%

New Delhi: Wholesale inflation remained within the central bank's tolerance zone in June, however, high retail prices and a weak rupee would likely prevent it from cutting interest rates this month.

The wholesale price index, India's main inflation gauge, rose 4.86% from a year earlier, compared with 4.70% in May, according to data released Monday by the Ministry of Commerce and Industry. The pace was slower than the median estimate of 5% in a poll of 16 economists.
The Reserve Bank of India says it would be comfortable with wholesale inflation below 5%.

Authorities are hopeful that this year's plentiful rains will boost farm output and improve supplies in the next few months, bringing down food prices.

Rainfall in India so far in this year's June-September monsoon season has been about 4% above normal. The monsoon covered the whole country by mid-June, about a month in advance, allowing farmers to start sowing activities early in India where most of the farmland is rain-fed.

Monday's data showed food prices in June rose 3.0% from May, largely due to a rise in vegetable prices, which were up 22%. Fuel prices rose 1.04% from May.