India’s retail inflation rises to 4-month high of 5.08% in June

[andhra_jp]

Food inflation remains above 8% for eighth consecutive month
            
India’s retail inflation rose to four-month high of 5.08 percent in June compared with 4.75 percent in the previous month as food inflation galloped to 9.4 percent given the impact of heatwave on vegetables.

Sequentially, consumer price index, which is used to measure inflation, was up 1.33 percent compared with the previous month, with food inflation rising 3.17 percent.

Food concerns rise

Within food, vegetables and pulses inflation continued to remain in double digits with 29.3 percent and 16.1 percent rise compared with 27.4 percent and 17.1 percent, respectively.

Potato inflation was a high 57.6 percent in June, onion inflation was 58.5 percent and tomato inflation at 26.4 percent.

Pulses inflation has remained in double digits for 13 consecutive months, whereas vegetables inflation has witnessed a double digit increase for the eighth consecutive month.

Sequentially, vegetable prices were up 14.2 percent from May, while pulses were up 2.5 percent.

"Last year's reduced output, the impact of heatwaves in May-June on the shelf life of vegetables, and heightened demand due to festive season last month have all contributed to the sequential uptick in their prices," said Rajani Sinha, chief economist, CareEdge.

RBI governor Shaktikanta Das in a recent interview with CNBC-TV18 had hinted at interest rates staying higher for longer.

Better days ahead

Improvement in rainfall situation across the country and favourable base owing to high inflation in the previous year is likely to keep inflation contained economists said.

"Rainfall has regained momentum into the crucial month of July, allaying supply concerns. Vegetables also have a short crop cycle, helping to make related price pressures less pervasive. July-August inflation will benefit from favourable base effects, but the pullback will be shallower than previously anticipated on still elevated vegetables and telecom tariff hikes by local providers," said Radhika Rao, senior economist, DBS Bank.