Consumer price index-based inflation for June shot up to 9.87 per cent, compared with 9.31 per cent last month, mainly due to the rise in vegetable and fruit prices.

A higher CPI reading for June has further dampened hopes of a policy rate cut by the Reserve Bank of India this month end, say economy watchers.

With the rupee falling nearly eight per cent against the dollar in recent weeks, the RBI is likely to keep the policy rates unchanged despite contraction in factory output in May.

Meanwhile, food inflation in June rose to 11.84 per cent from 10.65 per cent last month, official data released on Friday show.

Vegetable prices jumped up by 14.55 per cent in June over the year-ago period. Prices of fruits, too, witnessed a significant rise. However, experts said fruit and vegetables prices generally rise in June due to the rains.

Overall, retail inflation in rural areas stood at 9.63 per cent (8.98 per cent), in urban areas, it was 10.13 per cent (9.65 per cent).

Retail inflation is not the main gauge for inflation in India, but it could still have some persuasive value among policymakers.

(This article was published on July 12, 2013)
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