Retail inflation in June eases marginally to 6.26% from 6.3% in May

By: |
Updated: July 12, 2021 8:02 PM

Inflation based on the Consumer Price Index (CPI), however, remained above the Reserve Bank's comfort level for the second month in row.

The RBI has been mandated by the government to keep retail inflation at 4 per cent with a margin of 2 per cent on the either side.The RBI has been mandated by the government to keep retail inflation at 4 per cent with a margin of 2 per cent on the either side.

Retail inflation slipped a tad to 6.26 per cent in June although it remained above the comfort level of the Reserve Bank for the second consecutive month in a row.

The inflation based on the Consumer Price Index (CPI) was 6.3 per cent in May 2021 and 6.23 per cent in June 2020.

According to the National Statistical Office (NSO) data, the marginal slippage in the Consumer Price Index (CPI)-based inflation was noticed despite some firmness in the food inflation which inched up to 5.15 per cent in June from 5.01 per cent a month ago, mainly on account of higher prices of edible oils and fat.

On annual basis, the inflation in the ‘oils and fats’ segment was 34.78 per cent in June. While the rate of price rise in fruits basket was 11.82 per cent, it contracted in vegetables (-0.7 per cent).

Inflation in ‘fuel and light’ segment was 12.68 per cent.

The RBI has been mandated by the government to keep consumer inflation at 4 per cent with a margin of 2 per cent on the either side.

The central bank factors in the CPI inflation while arriving at its bi-monetary policy.

Suresh Nagpal, Chairman of Central Organisation for Oil Industry and Trade (COOIT), an apex association of edible oil, said internationally, the prices of edible started correcting in second fortnight of June.

“The Government of India has also reduced duty and has lifted restriction on imports of certain edible oils for the next few months. As a result, the prices of edible oils have softened in both wholesale and retail market since mid of June. We expect prices to remain at the current level over the next few months,” he said.

Commenting on the data, Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank said the softer than expected CPI inflation comes as a relief after a shockingly high May reading.

While the headline inflation still remains elevated and risks remain, the high frequency mandi data shows further moderation in food prices in July signalling towards a return of sub-6 per cent readings going ahead, she said.

“We continue to expect the MPC to retain its current policy guidance in the August policy in favour of growth. However, towards the end of the year gradual policy normalization will be underway,” she added.

Madhavi Arora, Lead Economist, Emkay Global Financial Services said the June print is a positive surprise and should augur well for the inflation estimates ahead, and could also push the inflation average for the year near RBI’s average if the momentum remains tamed.

“We remain watchful of pass through of impending cost push pressures in core goods inflation, while re-opening-led ensuing demand revival in select contact-sensitive household services could pressure core services inflation ahead,” she said.

The retail inflation in rural and urban areas was 6.16 per cent and 6.37 per cent, respectively, during June.

The price data are collected from representative and selected 1,114 urban markets and 1,181 villages covering all states and UTs through personal visits by field staff of Field Operations Division of NSO on a weekly roster.

During June 2021, NSO said data was collected from 99.6 per cent villages and 98.6 per cent urban markets.

Do you know What is FinMin releases Rs 9,871 cr grant to 17 state, Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1FHRAI urges FM Nirmala Sitharaman to bring back interest relief scheme for hospitality sector
2Globalisation tripled India GDP but workers have been left out: Economist and Nobel laureate Eric Maskin
3Services trade to boost Indo-US ‘ever expanding’ business ties: Piyush Goyal