Inflation up sharply in India, driven by food prices

NEW DELHI -- India's headline inflation has risen sharply in July following two months of moderation. Food prices continued to be the biggest driver, contributing to more than half of the month's headline CPI of 6.93%. Non-food categories also saw increased price momentum, resulting in higher core inflation.

In a comment on the numbers, ANZ Bank says that with food prices likely to be elevated because of supply-side bottlenecks, and a resumption of economic activity impacting core prices, it expects inflation to remain above the upper bound of the RBI's target band for the next one to two months.
"We therefore maintain our view that a rate cut is more likely in December than in October," the report says.

www.anzresearch.com (ATI).