ECONOMY

June retail inflation eases marginally to 7.01%, but still stays above RBI’s comfort zone

Retail inflation, as measured by the Consumer Price Index (CPI) marginally eased to 7.01 per cent on an annual basis in June from 7.04 per cent in May, owing to easing crude oil and edible oil prices.

Core inflation – excluding food and fuel segments – came in at 6 per cent in June. The overall food inflation came in at 7.75 per cent in June as compared to 7.97 per cent in the preceding month. 

Inflation rate for vegetables went up by 17.37 per cent in June. However, one of the key constituents of the Indian staple diet, pulses, witnessed a contraction of 1.02 per cent in June. 

Fuel and light inflation climbed up to 10.39 per cent in June in contrast to 9.54 per cent in May. 

Retail inflation has remained above the Reserve Bank of India’s (RBI) comfort zone of 2-6 per cent for the sixth consecutive month. The RBI will have to explain the reasons to the government by writing a letter if it stays above 6 per cent for one more quarter. 

The downward trend in inflation can be attributed to Excise Duty cuts on petrol and diesel, along with imposed restrictions on food exports. However, this decline is anticipated to be transitional as food prices are surging at an unprecedented rate on the back of unexpected heat waves. 

In addition to these factors, supply-chain disruptions due to ongoing geopolitical factors and hardening of commodity prices globally continue to thrust ahead the inflationary pressure. 

Report By