Moneycontrol
Get App
Last Updated : Jul 12, 2019 08:14 PM IST | Source: Moneycontrol.com

Retail inflation inches up to 3.18 percent in June, but well below RBI target

Inflation rate in cereals and products stood at 1.3 percent in June as against 1.24 percent in May while vegetables inflation stood at 4.66 percent in June as against 5.46 percent in May.

Moneycontrol News @moneycontrolcom

India's retail inflation for June came in at an eight-month high at 3.18 percent from 3.05 percent in May, on the back of an increase in prices of pulse.

The latest price data released by the Central Statistics Office showed that CPI-based inflation, which measures changes in shop-end prices, remained comfortably within the Reserve Bank of India's target level of 4 percent.

Food prices, which is a gauge to measure changes in kitchen budgets, grew 2.37 percent in June compared to 1.83 percent in May. Inflation rate in cereals and products stood at 1.3 percent in June as against 1.24 percent in May while vegetables inflation stood at 4.66 percent in June as against 5.46 percent in May.

Close

"Uptick in June 2019 inflation originated from food inflation, which was 12 months high at 2.17% and on increasing trajectory in last seven months. Pulses inflation was mainly responsible for spurt in food inflation; it was 33 months high at 5.7% in June 2019," said Devendra Pant, chief economist, India Ratings and Research.

Pulses inflation for June stood at 5.68 percent as against 2.13 percent in May. Housing inflation was seen at 4.84 percent in June against 2.13 percent in May. Clothing and footwear inflation for June was 1.52 percent as against 1.80 percent May.

“The numbers are in line with our expectations. It continues to reiterate the theme of lower growth and contained inflation,” said Anubhuti Sahay, Senior Economist, Standard Chartered Bank.

A reading below the RBI inflation target will likely support the RBI's decision last month to cut interest rates to boost economic growth.

“The numbers also mean that a rate cut is expected in the RBI monetary policy meet in August. We’ll watch out for liquidity management in the RBI’s internal policy report,” Sahay said.

Finance Secretary Subhash Chandra Garg has also stated that the slowdown will continue in the first quarter of the current financial year 2019-20 (FY20).

Experts expect the central bank to cut rates in August for the fourth consecutive time since February, to enhance liquidity after the government's annual budget last week lacked any direct steps to boost the economy.
First Published on Jul 12, 2019 05:37 pm
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant