NEW DELHI: Retail inflation in June is likely to be nearly 7.25%, higher than 7.04% in May, largely due to higher vegetable prices, feel experts. They think that recent corrections in commodity prices would only be reflected in July inflation numbers.
“Higher vegetable prices are likely to have pushed up the consumer price inflation in June to 7.2%,” says Aditi Nayar, chief economist at ICRA. Yuvika Singhal, economist at QuantEco Research, says that the June retail inflation is likely to see an uptick to 7.25% year-on-year despite a host of favourable factors like full impact of excise duty cut on petrol and diesel, moderating domestic wheat prices and a likely drop in housing prices.
She says these favourable factors have largely been offset by soaring vegetable prices, continued pass-through of global price pressures within fuel and light category, higher demand amidst complete opening up of the economy.
Retail inflation in May came down to 7.04% after touching a high of 7.8% in April. The Reserve Bank of India (RBI) has projected 7.5% inflation in the April-June quarter of the current financial year. Sunil Kumar Sinha, principal economist at India Ratings, says given the recent trends it is very likely that inflation in June would be at elevated levels.
He blames the higher inflation partly higher raw material prices in the international market. “Manufacturers are fully passing on the impact of higher raw material cost to consumers. This is the reason the core inflation remain at elevated levels,” he says.