NEW DELHI: Even as the consumer price-based inflation (CPI) eased marginally to 7.01% as compared with 7.04% in the previous month, it is still above the Reserve Bank of India’s tolerance level of 6% and this is the straight sixth month when retail inflation exceeded the upper band.
CPI-based or retail inflation had hit an eight-year high in April at 7.8%. As per the RBI’s latest forecast, average CPI inflation for July-September should be at 7.4%. The high inflation numbers have pushed the central bank to raise the interest rates twice.
According to the government data, core inflation plunged to 5.95%, less than 6% after a lag of three months. There was a slight fall in food inflation to 7.75% in June from 7.97% in May this year, majorly on account of a sharp decline in oil and fat inflation. Food prices, which comprise nearly half of the inflation basket, is likely to remain on the higher side owing to supply chain issues and surging crude oil price.
Commenting on the inflation numbers, Nikhil Gupta, chief economist at MOFSL group, said,” India’s June 2022 inflation came in at 7% YoY, similar to that in May 2022 and slightly lower than the consensus (our forecast of 7.3%). Lower inflation was primarily because of lower than expected food inflation (7.8% v/s our forecast of 8.8%)”.
“Overall, there were no surprises in today’s data. Thus, no major implications for August monetary policy. We expect a 25 basis point hike next month. Lower than expected inflation for the second consecutive month, however, is a relief,” Gupta said. Gupta expects headline inflation to stay at 7% in the second quarter of FY23 and ease towards 6.5% in quarter four.