From the monthly inflation release desk, the WPI goes down to 9.97% from last month’s headline number of 10.55%.
What’s scary? Like last month, the May numbers are revised to show inflation of 11.14% versus the 10.16% that was earlier reported. We might be seeing the current number too revised higher, in about three months.
The fuel price hike in June was 10%, and reflected in 3.2% month on month increase in the fuel index.
What happens now? Will inflation be the party pooper? Inflation continues to stay high despite the “low base effect” – we are now in uncharted territory in terms of the Wholesale Price Index, and the graph shows a steady, steep rise. If they have to use interest rates to control this inflation, it might need rates to go to 10% or 12% (you have to overcompensate). A double dip recession in the west might change things somewhat, though, but that stuff can take many months to reflect in our economic data.
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