Inflation Touches 22-Month High But Factory Output Rises

Consumer inflation edged slightly higher to 5.77 per cent in June, against 5.76 per cent increase in the previous month. Economists in an NDTV Profit poll had estimated inflation to rise at 5.75 per cent.

Food inflation stood at 7.79 per cent in June, higher than a revised 7.47 per cent in May.

However, core annual consumer price inflation slowed to around 4.5 per cent in June from around 4.7 per cent in May

In another set of economic data released today, factory output, as measured by index of industrial production (IIP), grew 1.2 per cent in May as against a downwardly revised 1.35 per cent contraction in April. IIP is an important measure of the economic performance given that it reflects consumer and investment demand.

June inflation numbers are the last set of inflation data to be released before the Reserve Bank of India meets on August 9 to take the crucial rate decision. The August meeting will be Raghuram Rajan's last meet as the central bank chief given that his term ends on September 4.

Rising prices is a cause of worry for the RBI which has set an inflation target of 5 per cent by March 2017. However, a pick-up in summer monsoon rains in recent weeks is expected to cool food inflation.

(With agency inputs)