Rising inflation cause of concern for India

India’s annual consumer price inflation accelerated to a near two-year high in May, driven by surging prices of food products such as pulses and sugar, which could dampen hopes of a rate cut at least during next monetary policy review in August.

After leaving rates unchanged last week, Governor Raghuram Rajan said the Reserve Bank of India, which has targeted inflation at 5 percent by March 2017, was looking for room to reduce interest rates, but there were concerns over upward pressure on food and commodity prices.
Annual consumer prices, which the RBI closely tracks to set its interest rate policy, rose by 5.52 percent in May, with an upwardly revised 5.47 percent in April.

Food inflation picked up to 7.55 percent in May from an upwardly revised 6.40 percent in the previous month, as prices of vegetables, sugar and pulses rose between 11 percent and as much as 32 percent from a year ago.