India’s retail inflation for the month of June 2023 increased to 4.81 per cent for the first time in five months from an upwardly revised 4.31 per cent in May, according to the official data released by Ministry of Statistics and Programme Implementation on Wednesday. However, the Consumer Price Index (CPI) based inflation remained within the RBI’s comfort zone of below 6 per cent. This is above the market forecasts of 4.58 per cent.
The June retail inflation increased to 4.81 per cent after declining for five months, due to fading favourable base and higher vegetable prices in the country. Meanwhile, India’s industrial production based on the IIP rose 5.2 per cent, according to the data released. The Consumer Food Price Index (CFPI) increased to 4.49 per cent in June from 2.96 per cent in May.
Reacting on the same, Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities, said, “June CPI inflation at 4.8 per cent was slightly higher than expectations with vegetable prices spiking up in June along with some increase in pulses prices. This trend in vegetable prices continued in July too. Core inflation was broadly unchanged at 5.1 per cent but will likely moderate over the next few months.” Kotak Institutional Equities is foreseeing an upside risk to CPI inflation over the next few months as monsoon-related risks on food prices play out. “The RBI will remain cautious and we continue to expect the RBI to remain on an extended pause as it watches for the domestic growth-inflation mix and global monetary policy decisions,” he added.
The retail inflation had declined to a 25-month low of 4.25 per cent in May on account of softening prices of food and fuel items. It was at 4.7 per cent in April, 5.66 per cent in March, 6.44 per cent in February, 6.52 per cent in January.