Retail Inflation Soared Again in June 2024: Revealed CPI Data

The Indian economy has demonstrated notable resilience during the April-June quarter, starting the financial year on a strong note as factory output reached a seven-month high in May. However, this encouraging performance was accompanied by a resurgence in retail inflation, which spiked to a four-month high in June, presenting significant challenges for policymakers as they seek to navigate interest rate adjustments.

According to data released by the statistics ministry, retail inflation, measured by the Consumer Price Index (CPI), increased to 5.08% year-on-year in June, up from a 12-month low of 4.75% in May. This uptick was primarily driven by rising food prices, which constitute nearly 40% of the consumer price basket.

Food inflation, as indicated by the Consumer Food Price Index (CFPI), escalated to 9.36% in June, compared to 8.69% in May and 8.70% in April. The persistence of food inflation above 8% since November, largely due to last year’s erratic and below-normal monsoon rainfall, has added pressure to the overall inflation landscape.

The rising prices of essential items such as cereals, vegetables, milk, and dairy products significantly contributed to this inflationary trend. Despite these challenges, India’s retail inflation has remained below the 6% threshold since September, consistently falling within the Reserve Bank of India’s tolerance range of 2-6% for the past ten months.

When examining regional variations, Delhi and Uttarakhand reported the lowest retail inflation rates at 2.18% and 2.89%, respectively. Other states, including Punjab (3.81%), Himachal Pradesh (3.86%), and West Bengal (4.03%), also maintained relatively low inflation rates. However, it is concerning that 12 out of 22 states experienced inflation rates above the national average, particularly in large states such as Andhra Pradesh, Assam, Bihar, Karnataka, Odisha, Telangana, and Uttar Pradesh.

This complex economic landscape underscores the dual challenges faced by policymakers in promoting growth while managing inflationary pressures in the Indian economy.

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