India Retail Inflation June 2024: Climbs to Four-Month High of 5.08%

India’s Retail Inflation Reaches 5.08% in June 2024

India retail inflation June 2024 rose to a four-month high of 5.08 percent, reflecting a significant rise in food prices. This marks an increase from 4.75 percent in the previous month, with food inflation jumping to 9.4 percent. June represents the eighth consecutive month where food inflation has remained above 8 percent, highlighting persistent price pressures in the food sector.

Sequentially, the consumer price index (CPI), which measures inflation, increased by 1.33 percent compared to May, with food inflation alone rising by 3.17 percent. Vegetables and pulses saw particularly sharp increases, with prices rising by 29.3 percent and 16.1 percent, respectively. Pulses inflation has remained in double digits for 13 consecutive months, and vegetable inflation has been above 10 percent for the past eight months.

Inflation in miscellaneous items was at 3.41 percent, remaining below 4 percent for the sixth consecutive month. Despite the high inflation, the Reserve Bank of India (RBI) is expected to maintain its current stance of keeping the policy rate on hold. RBI Governor Shaktikanta Das, in a recent interview, indicated that interest rates are likely to stay higher for longer due to the uncertain global economic environment and the CPI headline inflation hovering close to 5 percent.

The RBI’s monetary policy committee (MPC) kept the policy rate unchanged at 6.5 percent for the eighth consecutive time in its June meeting. The MPC is scheduled to meet again from August 6-8. Meanwhile, the cooling off of US inflation in June has increased the possibility of a rate cut by the Federal Reserve in September.

High Food Inflation Continues to Affect India’s Retail Inflation in June 2024

Food inflation has been a significant driver of India’s retail inflation in June 2024, which rose to 5.08 percent. The consumer price index (CPI) saw a month-on-month increase of 1.33 percent, with food prices climbing by 3.17 percent. This marks the eighth consecutive month of food inflation exceeding 8 percent, reflecting ongoing challenges in managing food prices.

Vegetables and pulses were the major contributors to the rise in food inflation, with prices increasing by 29.3 percent and 16.1 percent, respectively. The sustained high inflation in these categories has been a concern, with pulses inflation remaining in double digits for 13 consecutive months and vegetable inflation for eight months.

RBI Maintains Stance Amid Rising Inflation

Despite the rising inflation, the Reserve Bank of India (RBI) has indicated that it will maintain its current policy stance. RBI Governor Shaktikanta Das recently noted that the overall economic environment, both globally and in India, is too uncertain to consider an interest rate cut. The CPI headline inflation continues to hover around 5 percent, making it premature to discuss rate cuts.

The RBI’s monetary policy committee (MPC) kept the policy rate unchanged at 6.5 percent during its June meeting, marking the eighth consecutive time it has done so. The committee will reconvene from August 6-8 to review the policy rate.

Global Inflation Trends and Their Impact

The cooling of US inflation in June has raised the possibility of a rate cut by the Federal Reserve in September. This development could influence global economic conditions and potentially impact India’s inflation and interest rate policies.

For further insights on India’s economic indicators, check out the Reserve Bank of India’s website.

Also Read : RBI Governor Says It’s Too Early to Talk About an Interest Rate Cut