June WPI at 12.07%: Cascading effect on manufacturing prices not receding, says RBL Bank

RBL Bank expects food, fuel and power inflation to be steady month on month (MoM) based on WPI and consumer price index (CPI) data, Rajni Thakur, an economist at the bank, told CNBC-TV18. She further said that the cascading effect on manufacturing prices do not seem to be receding.

The June Wholesale Price Index (WPI) stands at 12.07 percent; a bit better than 12.94 percent in May. The food inflation is at 6.66 percent compared to 8.1 percent last month.

“From CPI (numbers came on July 12) and WPI data this month, we are looking at food largely steady, fuel and power largely steady on MoM basis, but the cascading effect on manufacturing prices do not seem to be receding in a hurry," she said.

This is the prime message from the WPI number that would be relevant from Monetary Policy Committee (MPC) perspective.

"The pricing pressure is not going away in a hurry and that will make the policy dilemma all the more difficult or trickier for them to handle going forward into the quarter,” said Thakur.

The RBI might find maintaining inflation and growth balance trickier now, according to the economist.

“The policy dilemma in front of MPC is to balance growth and rising price pressure in the economy. This is going to be trickier into the quarter."

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