JOIN USRetail inflation at 6.09% in June, above RBI’s tolerance level
India’s retail inflation remained elevated at 6.09% in June, backed by higher food and transportation costs. It was at 3.18% in June last year.
At 6.09%, the inflation print is above the Reserve Bank of India’s tolerance level of 4%, with a margin of 2%. A higher inflation print may restrict the central bank from giving any major policy rate cut in its August 6 monetary policy review.
The RBI focuses on retail inflation numbers while finalising its key policy rates.
Food inflation in June, however, eased to a nine-month low of 7.87%, according to the Consumer Price Index (CPI) data. It had reached 9.2% in May.
Economists across the spectrum said the RBI may stick to rate cut cycle to give a push to growth and financial stability, but the cuts may not be too steep.
Inflation in fruits and vegetables was sharply lower in June. Core inflation (non-food, non-fuel) too inched lower, reflecting weak demand conditions. Rural inflation stood at 6.2% while it was 5.9% in urban areas. Much of the food inflation was due to supply constraints and rising diesel prices, which pushed transportation costs.
RBI Governor Shaktikanta Das had recently said that maintaining growth and financial stability was the central bank’s goal but it had to be mindful of the rising inflation.
The government had suspended the release of CPI inflation headline numbers for April and May due to insufficient data during the lockdown period.
Prices in June were collected through telephonic calls from designated outlets in select markets, which was supplemented by information collected during the personal purchase of field staff for items being transacted from neighbourhood outlets, keeping in view the travel advisories during the lockdown, the Ministry of Statistics and Programme Implementation said.