June Inflation Higher Than Expected Due To Strain On Supply Chain, Say Experts

Retail inflation rose to 6.09 per cent in June compared with 5.84 per cent in March, pushed by a bigger increase in prices of some food items, government data showed on Monday. The government had suspended the release of inflation headline numbers for April and May due to inadequate data collection during two-months long lockdown. Here's what experts said on the inflation numbers:

Rupa Rege Nitsure, Group Chief Economist, L&T Financial Holdings

"Today's CPI print clearly shows the widening divergence between retail and producer prices due to disruption of supply chains and shortages. Food, fuel and services inflation - all together have contributed to the headline inflation in June."

"Even core inflation has risen to 4.90 per cent. This vindicates what I said in April that India is headed towards stagflationary conditions."

Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities

"The CPI inflation print is much higher than expected and partly contributed by increase in prices of fuel and light, petrol, diesel, and most probably gold. Food inflation spike at 7.3 per cent shows some of the strains in supply chain which should normalise if further wide spread lockdowns are not announced."

"Household goods and services as well as recreation segments' inflation is quite benign showing the impact of both supply and demand restrictions."

"Overall, while the headline print is a cause for concern, we should wait out for another couple of months to understand whether the price pressures are more structural. For now, it seems supply frictions, higher fuel prices, and uptick in precious metals prices seem to be the more dominant effect."

Rahul Gupta, Head of Research-Currency, Emkay Global Financial Services

"After two months, the government has released headline inflation data. The rise in headline CPI was mainly due to increase in food inflation which has been rising."

"The inflation number is still above RBI's upper band. The central bank's rate cut decision will depend on growth more than inflation figure, because growth is still a worry. Going ahead, as coronavirus-led restrictions slightly recover and as supply crunch reduce we may see CPI falling below 6 per cent."