WPI inflation edges up in June amidst rising food prices - ICICI Bank : Treasury Research

Headline inflation came in at 4.86% YoY in June 2013, versus our expectations of 4.9 - 5.1% YoY and previous month's print of 4.70% YoY. The April print was revised down to 4.77% YoY from 4.89% YoY earlier.

Primary inflation increased to 8.1% YoY in June from prior 6.7% YoY with food inflation rising to 9.7% YoY, from 8.8% YoY earlier.

Fuel inflation edged lower to 7.1% YoY in June from 7.3% in the previous month, on account of favourable base effect. The sequential momentum though rose to 1% MoM versus -0.9% MoM in May.

Manufactured products inflation fell to 2.75% YoY, lowest since November-2009. Moreover, core inflation dropped to 2.1% YoY, lowest level since January 2010.

We believe that the RBI would maintain caution and keep rates unchanged in the July 30th policy review amidst rising food inflation and persistent depreciation pressure on the Rupee on account of FII outflows particularly from the debt markets.

Source : Equity Bulls

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