Consumer inflation in June at record low of 1.54%

NEW DELHI: Consumer inflation in June cooled to a new record-low of 1.54 per cent, driven by a drop in food and oil prices, government data showed on Wednesday. In May consumer price inflation stood at 2.18 per cent, which was also a record low. Analysts believe this will intensify pressure on the RBI (Reserve Bank of India) to cut interest rates.A Reuters poll of over 30 economists had expected consumer prices to cool to 1.70 per cent.June’s inflation figure is the lowest since the series began in 2012 and below the RBI’s medium-term target of 4 per cent for an eighth successive month. Core inflation, however, has remained stubbornly above 4 per cent since at least 2015.Food and beverage price index, which accounts for nearly half the consumer price index basket, shrunk 1.17 per cent in June. Vegetables prices fell 16.53 per cent during the reporting month from last year, while price of pulses fell nearly 22 per cent.Last week, India’s weather office, the India Meteorological Department (IMD) said that the nation's cumulative rainfall between June 1 and July 2 was 6 per cent above the long-run average. Monsoon showers, which deliver about 70 per cent of India's annual rainfall, help drive higher food and grain production , keeping inflation in check.The RBI kept its benchmark interest rate unchanged in June while softening its hawkish stance following a drop in retail inflation The central bank also lowered its headline inflation forecasts to a range of 2.0-3.5 per cent for the first half of fiscal year 2017-18 and 3.5-4.5 per cent in the second half, down from 4.5 per cent and 5.0 per cent, respectively.Separately, industrial output rose 1.7 per cent in May after growing 3.1 per cent in April due to weaker performances in manufacturing, mining and power generation. The Reuters poll had expected IIP ( Index of Industrial Production ) to come at 1.9 per cent for May.The tepid factory output data could further bolster the case for an RBI rate cut next month to boost India’s economy, which grew 6.1 per cent in the January-March quarter, its weakest pace in more than two years.(With Reuters inputs)