India's retail inflation rate in June showed a reversal from previous months, driven by a notable increase in food prices. The year-on-year inflation rate, based on the All India Consumer Price Index (CPI), stood at 5.08 per cent (provisional). Specifically, rural areas saw inflation at 5.66 per cent, while urban areas recorded 4.39 per cent.
Food prices emerged as a significant concern, continuing to challenge policymakers. Government data highlighted increases across various categories including cereals, meat, fish, eggs, dairy products, oils, fruits, vegetables, pulses, sugar, spices, and prepared snacks and sweets on a month-on-month basis.
The data collection process involved personal visits to 1,114 urban markets and 1,181 villages across all States/UTs by field staff. The next CPI release for July 2024 is scheduled for August 12, 2024 (Monday).
In May, annual retail inflation had dipped to a 12-month low of 4.75 per cent, slightly down from April's 4.83 per cent. The inflation rate in December last year stood at 5.7 per cent, indicating a trend towards moderation since then.
India's retail inflation currently falls within the Reserve Bank of India's (RBI) comfort range of 2-6 per cent but remains above the ideal scenario of 4 per cent. Despite global inflation concerns, India has largely managed its inflation trajectory effectively. The recent rise in inflation for June follows a period of moderated inflation, despite the RBI maintaining the repo rate unchanged for the eighth consecutive time.
Since May 2022, the RBI has increased the repo rate cumulatively by 250 basis points as part of its efforts to combat inflation. This monetary policy tool aims to curb demand in the economy, thereby assisting in lowering inflation rates.
Persistent pressure from food prices continues to impede India's ongoing disinflation process, posing challenges to achieving the targeted 4 per cent inflation rate.
