of India retail inflation According to the data released by the Ministry of Statistics and Program Implementation (MoSPI) on Monday, it declined to 6.26 per cent in the month of June. Inflation remained above and above the Reserve Bank of India’s (RBI) limit of 6 per cent. Inflation rose to 6.30% in May, the highest in the last six months. This was mainly due to a jump in fuel prices and food items last month.
based on inflation consumer price Index (CPI) remained high due to spurt in petrol, diesel prices and costlier food items. Food inflation rose to 5.15 per cent in June from 5.01 per cent in May. Inflation of vegetables has come down to -0.7 percent in the month of June. Housing inflation stood at 3.75 per cent this month. Inflation in pulses rose by 10.1% month-on-month. Inflation in textiles and footwear rose to 6.21 per cent in June. ‘Fuel and light’ inflation remained at a high of 12.68 per cent during the month.
“It has been a while since global commodity prices are reflecting on domestic commodities as well due to the persistent inflationary trend and rising oil prices. In particular, higher petroleum product prices are putting upward pressure on transportation, food and other commodities in the domestic consumption basket, which have seen sharp price increases in recent periods. This is the second consecutive month that consumer inflation levels in June 2021 at 6.3% YoY are above the RBI’s comfort zone of up to 6% YoY and hence deserves attention,” said Vivek Rathi, director research, Knight Frank India.
“Overall, the June print is a positive surprise and should augur well for inflation projections, and could push the year-end inflation average closer to RBI’s average if the momentum continues. We remain alert to impending cost pressure pressures in core goods inflation, while an upcoming demand revival led by the reopening in select contact-sensitive domestic services could propel core services inflation. While the MPC may still choose to see a spike in inflation in the near term, the monetary response function is currently more hinged on growth revival,” said Madhavi Arora, principal economist at Emkay Global Financial Services.
According to the data released by the ministry, industrial production grew by 29.3 per cent in May due to low base effect. Almost all the sectors falling under the IIP category registered a sharp growth in May. “In the case of IIPs, the base effect of the stringent national lockdown last year continues to reflect on the 29.3% YoY growth seen in May 2021. The recently announced fiscal stimulus measures for the supply side will help the industry come out of the second wave impact. . However, only a sustainable revival in consumption demand can ensure better production capacity utilization to reflect IIP trends. There are some early signs of a correction, despite turbulence in the base effect, but the imminent third wave is keeping market participants on tenterhooks,” Rathi said.
The government has asked the central bank to maintain retail inflation at 4 per cent with a margin of 2 per cent for the five-year period ending March 2026. RBI has projected CPI inflation at 5.1 per cent for the current financial year. Year 2021-22.
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