NEW DELHI: Retail inflation slipped a tad to 6.26 per cent in June although it remained above the comfort level of the Reserve Bank for the second consecutive month in a row.
The inflation based on the Consumer Price Index (CPI) was 6.3 per cent in May 2021 and 6.23 per cent in June 2020.
According to the National Statistical Office (NSO) data, the marginal slippage in the Consumer Price Index (CPI)-based inflation was noticed despite some firmness in the food inflation which inched up to 5.15 per cent in June from 5.01 per cent a month ago, mainly on account of higher prices of edible oils and fat.
On annual basis, the inflation in the 'oils and fats' segment was 34.78 per cent in June.
While the rate of price rise in fruits basket was 11.82 per cent, it contracted in vegetables (-0.7 per cent).
Inflation in 'fuel and light' segment was 12.68 per cent.
The RBI has been mandated by the government to keep consumer inflation at 4 per cent with a margin of 2 per cent on the either side.
The central bank factors in the CPI inflation while arriving at its bi-monetary policy.
Suresh Nagpal, Chairman of Central Organisation for Oil Industry and Trade (COOIT), an apex association of edible oil, said internationally, the prices of edible started correcting in second fortnight of June.
"The Government of India has also reduced duty and has lifted restriction on imports of certain edible oils for the next few months. As a result, the prices of edible oils have softened in both wholesale and retail market since mid of June. We expect prices to remain at the current level over the next few months," he said.
Commenting on the data, Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank said the softer than expected CPI inflation comes as a relief after a shockingly high May reading.
While the headline inflation still remains elevated and risks remain, the high frequency mandi data shows further moderation in food prices in July signalling towards a return of sub-6 per cent readings going ahead, she said.
"We continue to expect the MPC to retain its current policy guidance in the August policy in favour of growth. However, towards the end of the year gradual policy normalization will be underway," she added.
Madhavi Arora, Lead Economist, Emkay Global Financial Services said the June print is a positive surprise and should augur well for the inflation estimates ahead, and could also push the inflation average for the year near RBI's average if the momentum remains tamed.
"We remain watchful of pass through of impending cost push pressures in core goods inflation, while re-opening-led ensuing demand revival in select contact-sensitive household services could pressure core services inflation ahead," she said.
The retail inflation in rural and urban areas was 6.16 per cent and 6.37 per cent, respectively, during June.
The price data are collected from representative and selected 1,114 urban markets and 1,181 villages covering all states and UTs through personal visits by field staff of Field Operations Division of NSO on a weekly roster.
During June 2021, NSO said data was collected from 99.6 per cent villages and 98.6 per cent urban markets.
Meanwhile, Industrial production surged 29.3 per cent in May, mainly due to low-base effect and good performance by manufacturing, mining and power sectors, but remained below the pre-pandemic level.
The manufacturing sector -- which constitutes 77.63 per cent of the Index of Industrial Production (IIP) -- grew 34.5 per cent in May this year, as per the data released by the National Statistical Office (NSO) on Monday.
The mining sector output rose 23.3 per cent in May while power generation increased 7.5 per cent during the same month.
In May 2021, the IIP stood at 116.6 points compared to 90.2 point in the same month last year.
The index was at 135.4 points in May 2019 as per the NSO data.
The data showed that industrial production recovered but was still below the pre-pandemic level in May 2019.
The IIP had contracted 33.4 per cent in May 2020.
"The IIP for May at 29.3 per cent suggests the supply chains have adopted over the last year to dampen the impact of second wave. This points to a robust Q1 considering the high frequency parameters for June are also positive," Shravan Shetty, MD Primus Partners, said.
Industrial production had plunged 18.7 per cent in March last year following the COVID-19 outbreak and remained in the negative zone till August 2020.
With the resumption of economic activities, factory output rose 1 per cent in September.
The IIP had grown by 4.5 per cent in October.
In November 2020, the factory output fell 1.6 per cent and then entered the positive territory by growing 2.2 per cent in December 2020.
The IIP had recorded a contraction of 0.6 per cent in January and 3.2 per cent in February this year.
In March, it grew 24.1 per cent.
For the month of April, the NSO held back the release of complete IIP data.
The second wave of the pandemic started in the middle of April this year and many states imposed restrictions to curb the spread of coronavirus infections.
"The growth rates over corresponding period of previous year are to be interpreted considering the unusual circumstances on account of COVID-19 pandemic since March 2020," NSO said in a statement.
The government had imposed a nationwide lockdown to contain the spread of coronavirus infections on March 25, 2020.
With the gradual relaxation of restrictions, there has been a relative improvement in economic activities as well as in data reporting, the Ministry of Statistics and Programme Implementation had said in a statement in November.
Earlier, the ministry had also given a disclaimer that it may not be appropriate to compare the IIP in the post-pandemic months with the data for the months preceding the COVID-19 outbreak.
The manufacturing sector had recorded a contraction of 37.8 per cent in May 2020.
Mining sector output fell 20.4 per cent in the same month last year.
The electricity generation had declined 14.9 per cent in May 2020.
The output of capital goods, which is a barometer of investment, grew 85.3 per cent in May 2021 as against a contraction of 65.9 per cent in the year-ago period.
Consumer durables manufacturing increased 98.2 cent in the month under review compared to a 70.3 cent decline in May 2020.
Consumer non-durable goods production grew 0.8 per cent in May this year where it was a contraction of 9.7 cent in the year-ago period.