New Delhi: India’s annual retail inflation accelerated in June, breaking a four-month lull, on the back of rising vegetable prices, government data showed on Wednesday. Retail inflation rose to 4.81 percent in June, higher than both the revised 4.31 percent for the previous month and the 4.58 percent expected in a Reuters poll of 55 economists.
“The higher-than-expected inflation was driven by vegetables, pulses and protein-rich items. Weather-related disruptions are expected to keep prices of perishable food items high in the near term,” said Upasana Bhardwaj, chief economist at Kotak Mahindra. Bank, Mumbai.”
“Sustained disruptions could lead to a 20-25 bps upside from our FY2014 average estimate of 5.1%. The Reserve Bank of India will remain vigilant on these supply-side moves, but we maintain our expectations of a pause on rates during the year.”
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“This trend in vegetable prices has continued in July as well. Core inflation was broadly unchanged at 5.1%, but it is likely to moderate in the next few months. Overall, we expect CPI inflation to pick up in the next few months. We see risks because there are risks related to monsoon.” Food prices are rising. The RBI will remain cautious and we expect the RBI to be on an extended pause as it monitors the domestic growth-inflation mix and global monetary policy decisions, says Suvodeep Prakshit, senior economist at Kotak Institutional Equities. Mumbai.”
“CPI inflation edged up from a 25-month low of 4.25% in May 2023 on account of a rise in inflation related to bad weather. We expect the Monetary Policy Committee to look at the short-term rise in food inflation and stay on hold for a longer period.” Garima Kapoor , Economist, Institutional Equities, Elara Capital, Mumbai, says global commodity deflation due to an impending cut in fuel prices and weaker growth in China will help balance the rise in food inflation in the near term.