Food inflation hits 9.4%; retail price rise rebounds to 5.1%

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A fruit vendor tends to customers at a fruit and vegetable wholesale market in Mumbai, India, February 8, 2023.
| Photo Credit: Reuters

Costlier vegetables, cereals and fruits spurred the rise in food prices paid by Indian consumers to a six-month high of 9.4% in June, escalating the headline retail inflation pace to a four-month high of 5.08% in June, from a revised 4.8% in May.

Rural inflation spiked to 5.66% from 5.3% a month ago, while urban consumers faced a price rise of 4.4% compared with 4.2% in May. However, urban India faced a higher food inflation of 9.55% while it was 9.2% for their rural peers.

While retail inflation has now been below 6% since September 2023, it is still far from the central bankโ€™s 4% target and Juneโ€™s Consumer Price Index (CPI) print dims the prospects of an interest rate cut in this calendar year as the Reserve Bank of India is waiting for a durable return to its target rate. Retail inflation stood at 4.87% in June 2023 while the food price index was up 4.55%.

The heatwave and delayed monsoon onset in parts of the country spurred vegetable prices 29.3% higher in June, from a 27.3% rise in May, making it the eighth successive month of double-digit rise in prices. Prices of pulses rose 16.1%, the thirteenth successive month of 10% inflation, while the price rise in fruits accelerated to 7.15%.

Crisil chief economist Dharmakirti Joshi termed the inflation in vegetables and foodgrains a major worry but hoped that the monsoonโ€™s progress should cool food inflation in coming months. However, non-food inflation which eased for the seventeenth straight month and hit a record low of 2.3% in June, could rebound due to the recent firming up in international freight costs, crude prices and telecom tariff hikes, he cautioned.

โ€œPersonal care products continue to see high inflation of 8.2% due to increase in prices of products by manufacturers,โ€ flagged Bank of Baroda chief economist Madan Sabnavis. Another worry, he said, is that half of Indiaโ€™s States have recorded an inflation rate above the national average of 5.1%, with Odisha seeing the highest uptick of 7.2%.

Inflation for Bihar consumers stood at 6.4%, followed by 6% in Karnataka, 5.87% in Andhra Pradesh, and 5.83% in Kerala and Rajasthan. Delhi recorded the lowest inflation of 2.2%, while Uttarakhand (2.9%), Punjab (3.8%) and Himachal Pradesh (3.9%) were the other States to record price rise of less than 4%, as per data for 22 States, including the erstwhile State of Jammu and Kashmir, released by the National Statistical Office.



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