Retail inflation in India increased to 4.81% in June

13 Jul 2023 , 10:29 AM

According to data released by the Ministry of Statistics, India’s retail inflation surged to 4.81% in June, following a drop to a 25-month low of 4.25% in May.

This marked the fourth consecutive month in which the consumer price index (CPI)-based inflation remained within the Reserve Bank of India’s (RBI) tolerance range of 2-6%.

The consumer food price index (CFPI) decreased from 2.91% in May to 4.49% in June. Inflation in rural areas stood at 4.72% compared to 4.96% in urban areas.

Sequentially, the inflation rate rose from 0.51% in May to 1.01% in June. The inflation rate for vegetables decreased by 0.93% compared to a degrowth of 8.1% in May.

Inflation rates for food and beverages and fuel segments were 4.63% and 3.92%, respectively. The inflation rate for cereals saw a slight increase from 12.65% in May to 12.71%.

These figures can be attributed to the recent sharp increase in the cost of vegetables, particularly tomatoes.

The higher-than-expected CPI inflation rate in June 2023 halted the previous four months’ welcome cooling due to a less supportive base and the beginning of the climb in vegetable prices. ICRA had predicted a CPI inflation rate of 4.7% for June 2023.

India’s retail inflation had exceeded the RBI’s 6% target for three consecutive quarters and only returned to the RBI’s desired level in November 2022.

In its recent Monetary Policy Committee (MPC) meeting, which concluded on June 8, the Reserve Bank of India lowered its inflation forecast for FY24. This decision was made in light of recent drops in inflation readings, although it is expected to remain above the 4% target for this fiscal year, despite anticipated supply disruptions.

In its April policy, the RBI had revised its inflation target downward from 5.2% to 5.1%.

For feedback and suggestions, please write to us at [e-mail].