Expert Views: India's consumer inflation edges up to 5.76 percent in May

MUMBAI (Reuters) - India's annual consumer price inflation edged up to a stronger-than-expected 5.76 percent in May, driven by higher prices of food and fuel products, government data showed on Monday.

COMMENTARY

ARVIND CHARI, HEAD OF FIXED INCOME AND ALTERNATIVES, QUANTUM ADVISORS, MUMBAI

"The CPI for May at 5.76 percent is in line with our internal expectations, but higher than market consensus.

"We had expected this on the back of higher food and fuel prices. And with the data that we are seeing currently, food prices have risen in June also. So we expect near-term CPI numbers to remain high and the hope for it to fall is really on monsoon and its impact on pulses and vegetables.

"If food prices do reverse, then it might keep hopes of one rate cut alive, but our base case view has been that we are in for a long pause at 6.5 percent (repo rate)."

MADHAVI ARORA, ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI

"We were little bit surprised that the food inflation came in above expectation. So across the board you saw increases in food prices. It's likely that the next month will also probably show the same ominous structure.

"On the non-food side, the core inflation side, most of the categories have shown lesser-than-expected month-on-month increase. The only shocker was the personal care component, which came in higher than expected.

"It seems that the next month's reading may also largely reflect this month's number or be marginally lower. We are looking at this point close to 5.6-5.7 percent kind of a range for next month as well."

A. PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI

"The headline is above our estimate, but core CPI has actually come in slightly softer, implying that the surprise was driven entirely by the food basket.

"While there are some seasonal factors at play, structural mismatches are also evident in the rise in protein inflation.

"Although underlying inflation may be more stable, headline is unlikely to decline back to 5 percent, within RBI's forecast horizon, should the government go ahead and implement pay hikes for bureaucrats.

"We stick to our call of no more rate cuts in this financial year."

(Reporting by Abhirup Roy and Neha Dasgupta; Compiled by Rafael Nam)