New Delhi: Food inflation snapped a two-week declining trend in late on April, but the Reserve Bank is seen awaiting more cues on prices and on demand before deciding on further policy action.
The food price index rose 16.44 per cent in the year to May 1, government data released on Thursday showed, above the prior week's annual rise of 16.04 per cent with prices of vegetables rising as a heat wave in the country damaged the perishable food.
Fuel prices rose 12.33 per cent, down from the previous week's annual rise of 12.69 per cent, while the primary articles index was up 16.76 per cent, compared with the previous week's reading of 13.93 per cent.
India's benchmark 10-year federal bond yield rose 2 basis points after the data.
The central bank is seen by analysts as waiting for more definitive readings on inflationary pressure and demand in the economy from April inflation and March quarter GDP data. Inflation data is in on Friday and GDP numbers are due on May 31.
Supply shortages of food, following a poor harvest last year, had pushed headline inflation upwards to a 17-month high of 9.9 per cent in March.
Analysts see it easing to 9.5 per cent in April, but rising demand outstripping increases in supply capacity has given rise to new inflationary pressures which the central bank has said are "worrisome."
Still, the Reserve Bank has indicated it will stick to its stated position of gradually exiting its easy monetary policy as high risks were associated with stronger action.
Broadening inflationary pressures have had the central bank raise rates twice by a total of 50 basis points since March 19, and markets expect further tightening down the year.
Comments
0 comment