India’s Retail Inflation Soars To 4.8% In June, CPI Inflation Continues To Remain Within Tolerable Band

After hitting a 25-month low in May, India’s retail inflation has surged from 4.25% to 4.81% in June on an annual basis, data by the ministry of statistics revealed on Wednesday.

The consumer price index (CPI) based inflation has reportedly remained within the RBI’s tolerance band of 2% to 6% for the fourth consecutive month. It eased to 4. 49% in June from 2.91% in May.

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The data further showed that the rural inflation stood at 4.72% while urban inflation was at 4.96% in June. This can be attributed to the surge in the prices of vegetables, especially tomatoes, over the past few weeks.

The retail inflation was above RBI's 6% target for the three consecutive quarters and had managed to fall back to the RBI's comfort zone in November 2022.

“The weather-related price disruption has also been seen in other vegetables and most notably in onion prices,” Anubhuti Sahay, an economist with Standard Chartered Bank, was quoted as saying by Bloomberg.

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The RBI had revised down the inflation forecast for FY24 in the recent Monetary Policy Meeting on June 8. The decision came amid recent dips in inflation readings, but the print is seen to remain above the 4 per cent target for this fiscal year while there are upside risks to food and commodity prices from potential supply cuts.

The RBI had cut down the inflation aim to 5.1% from 5.2% forecast in April policy. "The pace of monetary tightening has slowed in recent months, but uncertainty remains on its future trajectory as inflation continues to rule above targets across the world," RBI Governor and MPC Chair Shaktikanta Das said while announcing the policy decisions.