Inflation rises to 4.86 per cent in June, onion prices shoot up

Rising prices of food articles, especially vegetables, pushed inflation to 4.86 per cent in June. Onion prices rose sharply by 114 per cent for the month under review, against 97.40 per cent in May.

According to official data released on Monday, inflation based on Wholesale Price Index (WPI) in food articles category rose to 9.74 per cent, driven mainly by price rise in onion, cereals and rice.

The rate of price rise in food articles, which has a 14.34 per cent share in the WPI basket, was 8.25 per cent in May. Vegetables prices, too, went up by 16.47 per cent during the month, from 4.85 per cent in May. It was (-)9.05 per cent in April.

The non-food articles category, which include fibre, oil seeds and minerals, saw a sharp rise in inflation to 7.57 per cent, from 4.88 per cent in May.

Price rise in the manufactured items category, however, declined to 2.75 per cent in June from 3.11 per cent in May.

Inflation for April was revised downwards to 4.77 per cent from 4.89 per cent according to provisional estimates.

The inflation data would be closely watched by the Reserve Bank of India (RBI) while formulating its first-quarter policy scheduled for July 30. There have been demands for lowering interest rate in the backdrop of declining inflation.

WPI inflation had stood at 4.70 per cent in May. In June 2012, it was 7.58 per cent.

While the central bank has lowered interest rates by 1.30 per cent since January 2012, the banks have cut lending rates by only 0.30 per cent.

With inputs from PTI