The Consumer Price Index-based (CPI) inflation for June and the Index of Industrial Production (IIP) data for May are due to be released later on Friday. India's June retail inflation is expected to rise from the last month to 3.19 percent, while the industrial output for May is expected to be mostly unchanged at 3.3 percent, according to a CNBC-TV18 poll.

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Retail Inflation

The retail Inflation is expected to be in the range of 2.9 percent and 3.7 percent, as compared to 3.05 percent in the previous month. If the consensus forecast is realised, retail inflation will be below the RBI's medium-term target of 4 percent.

The food inflation for the month is also estimated to be little changed at 1.8 percent to 1.9 percent, as compared to 2 percent in the previous month, resulting from higher vegetable prices.

Food prices, which account for nearly half of the inflation basket, have been rising since early this year, a dramatic shift from their deflationary path in late 2018.

The seasonal increase in educational services and gold prices in the last month will keep the core CPI data steady at 4.2 percent, analysts said.

According to a Reuters survey, some economists expect the Reserve Bank of India (RBI) will cut rates in August for the fourth consecutive time since February to enhance liquidity after the government's annual budget last week lacked any direct steps to boost the economy.

Industrial Output Data

Industrial output is expected to soften on a month-on-month basis, in the range of 2.8 percent to 3.5 percent. Core Industries was seen higher at 5.2 percent in May but moderated from 6.3 percent in April.

The eight core industries — steel, coal, electricity, cement, refinery production, crude oil, natural gas, and fertiliser — comprise 40.27 percent of the weight of items included in the Index of Industrial Production.

However, auto sales continued to be weak with numbers at an 18 year low in May. The passenger vehicle sales were down about 20.6 percent yearly.

The Nikkei Manufacturing Purchasing Managers' Index (PMI) increased to 52.7 in May from April's eight-month low of 51.8, remaining above the 50-mark threshold that separates growth from contraction for a 22nd straight month.

(With inputs from Reuters)

First Published:Jul 12, 2019 9:30 AM IST