Fuel inflation eases; RBI rate move eyed
Fuel inflation eased on lower industrial fuel prices, but food inflation snapped a two-week easing trend in early July, reinforcing expectations for a 25-basis points hike in RBI's July policy review.Headline inflation in June was 10.55%, data released on Wednesday showed.
The fuel price index rose 14.27% compared with the previous week's 18.02%, while food price index rose an annual 12.81% in the year to July 3 against its 12.63% reading in the previous week.
Food inflation edged up marginally because of higher rice and wheat prices, data showed.
The Reserve Bank of India (RBI) is widely expected to raise key policy rates by 25 bps in its policy review later this month, after three rate hikes this year, including a 25-bps raise in key policy rates on July 2.
Analysts say the sharp revisions in the headline inflation number in March and April have maintained the case for further monetary tightening by the central bank on July 27 and even after that.
The RBI could raise the report rate, the rate at which it lends to banks by another 50 bps by the end of December, a Reuters poll of 21 economists showed.
