* June CPI inflation 5.00 pct y/y vs 4.87 pct in May
* June CPI food inflation 2.91 pct y/y vs 3.10 pct in May
* June core inflation at 6.3 pct vs 6.1 pct in May - analysts
* C.bank raised rates last month, next decision due Aug. 1 (Adds detail, comment)
By Manoj Kumar
NEW DELHI, July 12 (Reuters) - India’s annual retail inflation accelerated to a five-month high in June, driven by a weakening rupee as well as surging oil prices, bolstering the chance the central bank will again raise interest rates in coming months.
The Reserve Bank of India (RBI) last month raised its benchmark rate for the first time since 2014, by 25 basis points to 6.25 percent, and revised up its inflation projection for October-March to 4.7 percent from 4.4 percent earlier.
The RBI’s next policy review is on Aug. 1.
In June, consumer prices rose 5.00 percent from a year earlier, compared with a 4.87 percent increase in May, the statistics department said on Thursday.
The median forecast from economists polled by Reuters was for June inflation of 5.30 percent, well above May’s provisional 4.87 percent. The forecasts ranged from 4.60 percent to 6.00 percent.
Indranil Pan, group economist of IDFC Bank, said rupee depreciation was likely to push up prices of inputs for manufacturers, which would be reflected in higher retail prices, and the central bank would be guided by inflationary concerns.
“We are expecting the RBI to raise the policy rate two more times in the current financial year,” he said.
June was the eighth straight month in which inflation was higher than the RBI’s medium-term target of 4 percent.
The rupee has weakened nearly 7 percent this year, hitting a record low against the dollar last month. This has pushed up prices of imported items ranging from petroleum products, commodities, electronic and engineering items.
The benchmark Brent crude oil price has surged near 20 percent this year and had crossed $80 a barrel in May, the highest level since 2014.
India imports about 80 percent of its crude oil requirements. In 2018, retail prices of petrol have climbed 9.4 percent and diesel by 14.3 percent in the capital, Delhi.
However, annual retail food inflation, which contributes about half of the CPI index, was down 2.91 percent, compared with 3.10 percent the previous month, amid forecasts for normal rains this year.
The core annual consumer price inflation was around 6.3 percent in June, firming up slightly from 6.1 percent the previous month, according to three analysts.
Prime Minister Narendra Modi’s decision to raise procurement prices ahead of elections, estimated to cost 150 billion rupees ($2.2 billion) to the government, could push up prices of foodgrains in coming months.
The International Monetary Fund expects India’s economic growth to rebound to 7.4 percent in the fiscal year that began in April, from an estimated 6.7 percent the previous fiscal year.
Separately, industrial output grew 3.2 percent in May from a year earlier, compared with economists forecast of 5.2 percent, government data showed. ($1 = 68.6000 Indian rupees) (Additional reporting by Suvashree Dey Choudhury and Tanvi Mehta; Editing by Richard Borsuk and Robert Birsel)