Business & Finance

Retail Inflation At 7.01 Per Cent In June; Above RBI’s Tolerance Limit For Sixth Straight Month

Retail Inflation
The retail inflation, measured by the Consumer Price Index (CPI), marginally eased to 7.01 percent in June.

Mumbai: The Retail Inflation, which is measured by Consumer Price Index (CPI), in India during June stood at 7.01 percent, which is almost the same as compared with 7.04 percent in May. This is the sixth consecutive month that the inflation is above the RBI’s tolerance limit of six percent. Inflation in rural areas stood at 7.09 percent during June 2022, while that in urban areas was 6.92 percent.

However, this is the second consecutive month that has seen a slight easing in inflation as compared to the previous month. The inflation in April had stood at 7.79 percent, which fell to 7.04 percent in May and now to 7.01 percent in June.

The core inflation, which excludes food and fuel segments, stood at 6 percent in June. The food inflation was at 7.75 percent in June, compared with 7.97 percent the preceding month.

RBI has raised interest rates by 90 basis points (bps) so far this year to 4.9 percent and is set to add more in the coming months. RBI Governor Shaktikanta Das said that inflation may not fall within the top end of its mandated target band until December this year.The Reserve Bank factors in the retail inflation print in its bi-monthly monetary policy. The government has tasked the central bank to ensure inflation remains at 4 per cent with a margin of 2 per cent on either side.

However, the number has remained above the Reserve Bank’s comfort zone of 2-6% for the sixth consecutive month. The RBI will have to explain the reasons to the government by writing a letter if it stays above 6% for one more quarter.
The downward trend in inflation can also be attributed to excise duty cuts on petrol and diesel along with imposed restrictions on food exports. However, this decline is anticipated to be transitional as food prices are rising at an unprecedented rate on the back of unexpected heatwaves.Surging global commodity prices due to the Russia-Ukraine war and high crude oil prices have kept inflation above RBI’s 6 percent upper tolerance range.
The RBI, in its monetary policy announcement last month, had projected India’s inflation to start easing from October. It is trying to keep the monetary tightening to a minimum, as back-to-back price hikes might tumble the economic recovery.

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