Inflation rises to 10.55% in June

India's annual rate of inflation, based on wholesale price index (WPI), rose at a less than anticipated pace in June, data released by the Government showed. Inflation stood at 10.55% in June 2010 as compared to 10.16% in the previous month, the Government said. Inflation for June had been expected to come in at around 10.7-10.8%. Meanwhile, April's inflation figure was revised to 11.23% compared to the preliminary estimate of 9.59%. It may be recalled that last month, the Government had revised upwards March inflation rate to 11.04% from a provisional reading of 9.90%.



The official Wholesale Price Index for 'All Commodities' for the month under review rose by 0.7% to 259.8 from 258.1 in the previous month. Build up inflation in the financial year so far was 2.53% compared to a build up of 2.98% in the corresponding period of the previous year. The double-digit inflation in June could be partly attributed to low base in the year-ago period when the inflation was at -1.01%.

Finance Minister Pranab Mukherjee said that inflation will moderate once the Kharif crop is harvested and expects the fiscal deficit target of 5.5% of GDP for FY11 to be achieved. "I do feel that the annual rate of inflation will be 5-6 per cent (by 2010-end)," he told reporters. The Reserve Bank of India (RBI), which early in July raised policy rates by 25 basis points in a surprise move, is expected to continue with its 'calibrated' monetary tightening. Markets expect the central bank to announce another quarter point hike in key short-term rates at the scheduled review on July 27. That will take the total increase in benchmark rates to 1% since mid-March.