Rising Food Prices Drive June Retail Inflation to a Three-Month High of 4.81%
New Delhi: Retail inflation rose to a three-month high of 4.81% in June, mainly on account of rising prices of vegetables and pulses, data released by the government on Wednesday, July 12 showed.
In March, the Consumer Price Index-based inflation was recorded at 5.66%.
According to the data released by the National Statistical Office (NSO), the inflation in the food basket was at 4.49% in June, higher than 2.96% in May. The food basket accounts for nearly half of the CPI.
According to CNBCTV-18, rural inflation rose to 4.72%, up from 4.17% in May, while urban inflation increased to 4.96% from 4.27% in the same period.
Aditi Nayar, chief economist and head – research and outreach, ICRA, told PTI that the spike in vegetable prices is set to push the CPI inflation to an uncomfortable 5.3-5.5% in July.
“We expect the vegetable price shock to result in the Q2 FY2024 CPI inflation exceeding the (RBI’s) Monetary Policy Committee’s last forecast of 5.2%,” she told the news agency.
“Accordingly, we anticipate that the [RBI] committee will retain its hawkish tone in August 2023, keep the repo rate unchanged and signal that a pivot to rate cuts remains distant,” she said.
Suvodeep Rakshit, senior economist at Kotak Institutional Equities, told CNBCTV-18 that the June CPI inflation of 4.8% exceeded expectations slightly due to a surge in vegetable prices, accompanied by a modest increase in pulses prices.
“This trend in vegetable prices continued in July too. Core inflation was broadly unchanged at 5.1% but will likely moderate over the next few months. Overall, we see upside risks to CPI inflation over the next few months as monsoon-related risks on food prices play out,” he said.
Narinder Wadhwa, national president of Commodity Participants Association of India, told the news agency: “It [the rise in food prices] may be influenced by various factors such as changes in demand-supply dynamics, fluctuations in global commodity prices, government policies, or other economic factors. The rise in inflation is higher than street’s expectations.”
