India’s June retail inflation up 6.26%, RBI seen holding rates - GulfToday

India’s June retail inflation up 6.26%, RBI seen holding rates

India-Economy-750

Shopkeepers work at a grocery outlet in Amritsar, India. Agence France-Presse

India’s June retail inflation eased up on a sequential basis but still managed to remain above the 6 per cent threshold. The data, furnished by the National Statistical Office (NSO), showed that the Consumer Price Index (CPI) slipped to 6.26 per cent last month from 6.30 per cent in May.

Region wise, the CPI Urban rose to 6.37 per cent last month from 5.91 per cent in May, and the CPI Rural climbed to 6.16 per cent in June from 6.55 per cent in May.

As per the NSO data, the Consumer Food Price Index increased to 5.15 per cent last month from 5.01 per cent in May.

The CFPI readings measure the changes in retail prices of food products.

India’s June retail inflation up 6.26 per cent year on year but the central bank seen holding rates.

The macro-economic data assumes significance as it is still above the retail inflation range of the Reserve Bank of India, which has set a range of 2-6 per cent for retail price-based inflation.

RBI
Picture used for illustrative purpose only.

The high retail inflation reduces the chance of the RBI to further loosen up the monetary policy. In terms of CPI YoY inflation rate, pulses and products’ prices jumped higher by 10.01 per cent in June 2021.

Meat and fish prices rose 4.83 per cent, eggs became dearer by 19.35 per cent and the overall price of food and beverages category was up 5.58 per cent. However, vegetable prices declined by 0.70 per cent.

Besides the official data, the inflation rate for fuel and light was at 12.68 per cent.

“The CPI inflation for June 2021 offered a modicum of relief, easing marginally to 6.26 per cent from 6.3 per cent in the previous month, despite a pickup in food inflation and rising retail fuel prices. However, it did remain above the upper threshold of the MPC’s 2-6 per cent medium term target for the second month in a row, and exceeded our projection of 6.1 per cent,” ICRA’s Chief Economist Aditi Nayar said.

“The month-on-month uptick in the CPI inflation eased to 0.6 per cent in June 2021 as the phased unlocking commenced at the state level, from the sharp 1.6 per cent in the previous month, adding heft to the argument that the latter was largely transitory.”

India Ratings & Research Principal Economist Sunil Kumar Sinha said: “Retail inflation in June 2021 moderate marginally to 6.26 per cent. Despite cereals deflation coming in at 1.9 per cent in June 2021 compared to 1.4 per cent in May 2021, higher inflation of eggs, oil and fats and pulses resulted in elevated food inflation at 5.15 per cent.”

“Going forward, while elevated food inflation of last year (from July 2020 to October 2020) will provide some comfort, elevated oil and fat inflation and recent milk price hike of around 4 per cent by Amul followed by other players such as Mother Dairy would keep food inflation high.”

The Congress party is holding a series of press conferences, 23 of them across the country to rake up the issues of rising inflation and fuel price hike. All the senior party leaders have been roped in to highlight the plight of the people. The press conferences are in the wake of Congress holding protests till July 17 on the issue.

Kamal Nath, Bhupesh Baghel, Digvijaya Singh, Anand Sharma, M. Kharge and Manish Tewari are among the 23 leaders who will be addressing the press conferences. In UP, Kamal Nath will do a press conference and Tewari and Sachin Pilot in Dehradun.

On Tuesday, P Chidambaram addressed a press conference in Delhi and targeted the government for inflation and demanded relief for people.

Addressing a press conference here, former Finance Minister P Chidambaram said, “Inflation, even in a normal time, would be intolerable. The present is not a normal time. A pandemic is raging across the country. The pandemic has resulted in jobs being axed, unemployment rising to 8.1 per cent and incomes/wages being cut for millions of working people. In such a situation of widespread distress, inflation has broken the back of the people, and we hold the Central government under Narendra Modi directly responsible for the high inflation.”

“Let me caution the government, the issue of high inflation will not go away if you pretend it does not exist,” he said.

Meanwhile the Congress party is holding a series of press conferences, 23 of them across the country to rake up the issues of rising inflation and fuel price hike. All the senior party leaders have been roped in to highlight the plight of the people. The press conferences are in the wake of Congress holding protests till July 17 on the issue.

Kamal Nath, Bhupesh Baghel, Digvijaya Singh, Anand Sharma, M. Kharge and Manish Tewari are among the 23 leaders who will be addressing the press conferences. In UP, Kamal Nath will do a press conference and Tewari and Sachin Pilot in Dehradun.

Yesterday (Tuesday), P. Chidambaram addressed a press conference in Delhi and targeted the government for inflation and demanded relief for people.

 

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