India’s retail inflation surpasses 5% in June due to rising food prices
New Delhi, July 12: India’s retail inflation rate hardened in June, taking a departure from the moderation it witnessed in the past months, pushed by rising food prices. The year-on-year inflation rate based on all India Consumer Price Index (CPI) number is 5.08 per cent (provisional) for the month of June, 2024. Corresponding inflation rate for rural and urban is 5.66 per cent and 4.39 per cent, respectively.
Food prices continue to remain a pain point for the policymakers in India. Government data showed on Friday retail inflation for cereal and products, meat and fish, egg, milk and products, oils and fats, fruits, vegetables in particular, pulses and products, sugar, spices, prepared snacks and sweets rose month-on-month.
The price data are collected from selected 1114 urban Markets and 1181 villages covering all States/UTs through personal visits by field staff. Next date of release for July 2024 CPI is August 12, 2024 (Monday).
Annual retail inflation in May was at a 12-month low of 4.75 per cent, marginally down from 4.83 per cent in April. The retail inflation or Consumer Price Index, in December last year was 5.7 per cent, and since was moderating.
The retail inflation in India is in RBI’s 2-6 per cent comfort level but is above the ideal 4 per cent scenario.
Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory quite well. The eased month-on-month retail inflation, barring June, came on the heels of RBI having maintained the status quo in the repo rate for the eighth straight occasion.
Barring the recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
The repo rate is the rate of interest at which the RBI lends to other banks.
Pressure in food prices has been interrupting the ongoing disinflation process in India, and posing challenges for the final descent of inflation trajectory to the 4 per cent target.