Reserve Bank of India hiked the benchmark interest rates for the first time in four years and just after a week the retail inflation in India has rose.
CPI in April was 4.58% and in May, it mounted at 4.87%. Economists polled by Bloomberg had estimated CPI inflation at 4.9 percent.
RBI expects that in the first half of the financial year, inflation to stay between 4.8 till 4.9%
Chief economist at India Ratings and Research Mr Devendra Kumar Pant said “Higher retail inflation in May 2018 also originated from food inflation. It increased to three month high of 3.1 percent mainly due to fruits, vegetables, cereals and oil & fats.”
As per India’s six member monetary policy committee in its June meeting have raised the repo rqate to 6.25% saying that higher housing prices and crude oil is the main cause of increase of inflation. MPC will keep a track on the impact of cruide oil prices on inflation and on other risks. This wil have a huge impact on HRA (House Rent Allowance) for state government employees and also hike in prices of kharif crop to farmers