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Retail inflation eases to five-year low; factory output at 1.7%

By Reuters

  • 12 Jul 2017
Retail inflation eases to five-year low; factory output at 1.7%
Credit: Shah Junaid/VCCircle

India's annual consumer price inflation eased to a lower-than-expected 1.54% in June, the lowest since a new index was adopted in 2012, from 2.18% in May.

Separately, data showed industrial output rose 1.7% in May from a year earlier.

Suvodeep Rakshit, senior economist, Kotak Institutional Equities, said: "This print will provide room for RBI to cut repo rate by 25 bps, but scope for further rate cuts would be restricted as the RBI would likely wait-and-watch the impact of HRA (house rent allowance) increases over the next few months.

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"Recent increase in vegetable and cereals prices would also keep the RBI cautious. Further, developed markets have been signalling a reversal in their policy stances for some time. "

"While we expect the RBI to cut by 25 bps it would be in some sense a 'hawkish' cut."

Industrial output

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India's industrial output grew 1.7% in May from a year earlier, government data showed on Wednesday.

Economists surveyed by Reuters had forecast 1.9% growth in output compared with a revised 2.8% year-on-year increase in April.

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