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Inflation rises owing to surge in food, fuel prices

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A man weighs vegetables at a popular market in Caracas on October 24, 2013. Venezuela, which is highly dependent on basic commodity imports, will massively boost its food and basic supplies imports in the next two months to counter shortages and high inflation, Vice president for the economy Rafael Ramirez said Wednesday. Since President Nicolas Maduro took office on April 19, Venezuela has seen a cyclical increase in shortages of sugar, coffee, oil, milk and toilet paper, among other products. Meanwhile, annual inflation in September soared to 49.4 percent, the highest in the past 13 years, according to official data.  AFP PHOTO / JUAN BARRETO        (Photo credit should read JUAN BARRETO/AFP/Getty Images)

By NewsGram Staff Writer

India’s retail inflation surged to 5.40 percent in June from 5.01 percent in May due to a rise in food and fuel prices propelled, official data showed on Monday.

The data furnished by the Central Statistics Office (CSO) showed that the retail, or the consumer price index (CPI) inflation, in the corresponding month of 2014 stood at 6.77 percent.

According to the CSO data, the CPI-urban for June inched higher to 4.55 percent from 4.41 percent in May. The June CPI-rural, meanwhile, jumped to 6.07 percent from 5.52 percent in May.

The main cause for the rise in June inflation was attributed to costlier food items.

The “Food and beverages” sub-indice in the CPI has the highest weightage of about 45.86. It rose to 5.48 percent from 4.80 percent in May.

However, food inflation during June 2015 was lower in comparison to the corresponding month of 2014, when it stood at 7.21 percent.

The food inflation in the urban areas touched 5.24 percent from 4.48 percent in May. The food inflation burden for the rural households in June rose to 5.61 percent from 4.74 percent in May.

The food inflation in rural and urban areas during the corresponding month of 2014 stood at 8.05 percent and 5.62 percent, respectively.

Prices of protein based food items like pulses, milk, egg, meat and fish accelerated. Pulses became costlier by 22.24 percent on an year-on-year (YoY) basis.

Milk and milk-based products became dearer by 7.18 percent. Prices of meat and fish appreciated by 6.99 percent. Cost of eggs rose by 5.09 percent.

Spices became expensive by 9.71 percent. Vegetables’ prices were up by 5.37 percent.

However, sugar and confectionery costs came down by 8.55 percent in the month under review on an Year-on-Year(YoY) basis.

Fuel and light products which constitutes 6.84 percent of the CPI grew by 5.92 percent in June.

The uptick in the CPI will be a major concern for the Indian industry, as it belies the hope of a future rate cut by the Reserve Bank of India (RBI).

The recent slowdown in the factory output, revealed by the Index of Industrial Production (IIP) data released on Friday and good progress of monsoon, had renewed hopes of India Inc. for another rate cut from RBI during its monetary policy review in August.

“CPI breaching the 6 percent comfort level in rural India is a concern. Uptick in retail prices in urban and rural regions in June has shrunk RBI’s window for cutting rates further,” said Debopam Chaudhuri, chief economist, ZyFin Research.

A retarded growth in manufacturing output slowed India’s overall industrial production expansion to 2.7 percent for May — against 4.1 percent in April.

The RBI had lowered its short-term lending rate by 25 basis points in its monetary policy review in June.

That time RBI Governor Raghuram Rajan said the central bank’s next move will be data-dependent. It will also keep an eye on how monsoon progresses and the steps taken by the government to mitigate its negative effects, Rajan had added.

(With inputs from IANS)

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PNB says no “cash shortage” in its ATMs

Finance Minister Arun Jaitley sought to allay fears amidst reports of a cash crunch and empty ATMs in the country

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PNB: No cash shortage in ATMs. Wikimedia Commons

State-run Punjab National Bank (PNB) on Wednesday said there is no “cash shortage in its ATMs across the country.

“Overall, Punjab National Bank has not faced any cash shortage in its ATMs across the country and continue to function as usual,” the state-run lender said in a statement. “Out of 9,679 PNB ATMs, there is a 90 per cent availability of ATMs which is normal.”

PNB denies claims of cash shortage.

On Tuesday, Finance Minister Arun Jaitley sought to allay fears amidst reports of a cash crunch and empty ATMs in the country by stating that “there is more than adequate currency in circulation”, even as the government blamed “unusual demand” for shortages in some areas.

Also Read: PNB scam: Additional Rs 1,300 cr fraud revealed

Besides, the central government announced that it has decided to increase printing of Rs 500 notes by five times. In addition, the Reserve Bank of India (RBI) said that it is “taking steps to move currency to areas” which have witnessed unusually large cash withdrawals.

“The shortage may be felt in some pockets largely due to logistical issues of replenishing ATMs frequently and the recalibration of ATMs being still underway. RBI is closely monitoring both these aspects,” the RBI had said in a statement on Tuesday. “Further, as a matter of abundant precaution, RBI is also taking steps to move currency to areas which are witnessing unusually large cash withdrawals.” IANS

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