Wednesday 30 / October / 2024
New Delhi: Rising food prices continued to be a headache for Indian consumers with the inflation rate in the food segment almost doubling year-on-year in June.
The food inflation almost doubled to 8.36 per cent last month, versus 4.63 per cent reported same month of 2023, data showed.
Government data showed on Friday that retail inflation for all segments of food -- cereal and products, meat and fish, egg, milk and products, oils and fats, fruits, vegetables in particular, pulses and products, sugar, spices, prepared snacks, and sweets -- rose month-on-month.
India's overall retail inflation rate hardened in June, taking a departure from the moderation it witnessed in the past months, pushed by rising food prices.
The year-on-year inflation rate based on all India Consumer Price Index (CPI) numbers is 5.08 per cent (provisional) for the month of June, 2024. Corresponding inflation rate for rural and urban is 5.66 per cent and 4.39 per cent, respectively.
Food prices continue to remain a pain point for the policymakers in India, who wish to bring retail inflation to 4 per cent on a sustainable basis.
Annual retail inflation in May was at a 12-month low of 4.75 per cent, marginally down from 4.83 per cent in April. The retail inflation or Consumer Price Index, in December last year was 5.7 per cent, and since was moderating.
"The CPI inflation came marginally higher than our expectations. While the food inflation risks will continue to dominate in near term, we expect the better sowing patterns and spatial distribution of rains to eventually ease the price pressures beyond these volatile months. Having said that, the central bank will be in no hurry to ease monetary policy given the headroom from robust growth in the backdrop of near term inflation risks," Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, said.
The retail inflation in India is in RBI's 2-6 per cent comfort level but is above the ideal 4 per cent scenario.
Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory quite well. The eased month-on-month retail inflation, barring June, came on the heels of RBI having maintained the status quo in the repo rate for the eighth straight occasion.
Barring the recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
The repo rate is the rate of interest at which the RBI lends to other banks.
Pressure in food prices has been interrupting the ongoing disinflation process in India, and posing challenges for the final descent of inflation trajectory to the 4 per cent target.
Next monetary policy meeting of RBI is scheduled in early August.
