Inflation in India jumps on weak currency, rising food prices

NEW DELHI - India’s closely-watched wholesale price inflation has jumped in July to a higher-than-expected 5.8% y/y, led by upward energy price adjustments, rising food prices and the impact of a weakening rupee. Reassuringly, core inflation stayed benign at 2.3% y/y (from 2.1% y/y in June). The jump in headline WPI inflation, which reached a five-month high, was influenced by the import pass-through of a near 10% rupee depreciation during May-July, accentuated by a hike in regulated diesel prices (3% m/m) and a surge in prices of fruit and vegetables (10.5% m/m) amid temporary supply distortions from heavy rains.