Costlier vegetables, cereals and fruits spurred the rise in food prices paid by Indian consumers to a six-month high of 9.4% in June, escalating the headline retail inflation pace to a four-month high of 5.08% in June, from a revised 4.8% in May.
Rural inflation spiked to 5.66% from 5.3% a month ago, while urban consumers faced a price rise of 4.4% compared with 4.2% in May. However, urban India faced a higher food inflation of 9.55% while it was 9.2% for their rural peers.
While retail inflation has now been below 6% since September 2023, it is still far from the central bank’s 4% target and June’s Consumer Price Index (CPI) print dims the prospects of an interest rate cut in this calendar year as the Reserve Bank of India is waiting for a durable return to its target rate. Retail inflation stood at 4.87% in June 2023 while the food price index was up 4.55%.
The heatwave and delayed monsoon onset in parts of the country spurred vegetable prices 29.3% higher in June, from a 27.3% rise in May, making it the eighth successive month of double-digit rise in prices. Prices of pulses rose 16.1%, the thirteenth successive month of 10% inflation, while the price rise in fruits accelerated to 7.15%.
Crisil chief economist Dharmakirti Joshi termed the inflation in vegetables and foodgrains a major worry but hoped that the monsoon’s progress should cool food inflation in coming months. However, non-food inflation which eased for the seventeenth straight month and hit a record low of 2.3% in June, could rebound due to the recent firming up in international freight costs, crude prices and telecom tariff hikes, he cautioned.
“Personal care products continue to see high inflation of 8.2% due to increase in prices of products by manufacturers,” flagged Bank of Baroda chief economist Madan Sabnavis. Another worry, he said, is that half of India’s States have recorded an inflation rate above the national average of 5.1%, with Odisha seeing the highest uptick of 7.2%.
Inflation for Bihar consumers stood at 6.4%, followed by 6% in Karnataka, 5.87% in Andhra Pradesh, and 5.83% in Kerala and Rajasthan. Delhi recorded the lowest inflation of 2.2%, while Uttarakhand (2.9%), Punjab (3.8%) and Himachal Pradesh (3.9%) were the other States to record price rise of less than 4%, as per data for 22 States, including the erstwhile State of Jammu and Kashmir, released by the National Statistical Office.
