Retail Inflation Eases To 2.1% In June, Lowest In Six And A Half Years
This was the fifth straight month when inflation was below the RBI's 4% target.
India's retail inflation fell further in June, coming in at the lowest since January 2019, led by a fall in prices of several food items.
The consumer price index-based inflation moderated to 2.1%, from 2.82% in May, according to data from the Ministry of Statistics and Program Implementation on Monday.
The CPI inflation was lower than economist estimates. Inflation was projected to ease to 2.3% in June, according to a median forecast of economists polled by Bloomberg. This was also the fifth straight month when inflation was below the Reserve Bank of India's 4% target.
Food and beverage prices deflated by 0.2% in June, as against an inflation of 1.5% in May. The decline was led by vegetable inflation, which contracted by 19% compared to 13.7% in the preceding month. Inflation in the pulses category contracted by 11.8% after contracting 8.2% last month.
The core CPI inflation, however, rose to 4.55% from 4.35% last month.
CPI inflation for June cooled led by moderating food prices and aided by high base, said Garima Kapoor, economist at Elara Capital.
Upasna Bhardwaj, chief economist at Kotak Mahindra Bank also said that the softer than expected headline inflation comes on the back of moderating food prices. However, core inflation has ticked up. Overall, the high frequency mandi prices suggest food prices remain largely muted, except for few vegetable prices, Bhardwaj said, adding that the FY26 inflation is likely to undershoot RBIs estimates of 3.7% by around 50 basis points. "While comfortable inflation opens room for further monetary easing, we expect the RBI to maintain a pause in the coming 1-2 meetings and remain watchful of the transmission ahead along with global uncertainties," she said.
"We expect full year CPI inflation to remain below RBI's full year estimate of 3.7% and hence do no rule out possibility of another rate cut post end of monsoon,” Kapoor said.
The urban inflation came in at 2.56% in June, declining 3.12% in May. Similarly, rural inflation also fell to 1.72% from 2.59% in the preceding month.
Key Items (Y-o-Y)
Cereal prices rose by 3.3% in June after rising by 4.8% in May.
Meat and fish prices declined by 1.6% compared to a decline of 0.4% in the previous month.
The inflation rate for milk and milk products was 2.8% compared to 3.2% in the previous month.
Clothing inflation was at 2.55% compared to 2.7% a month ago.
Housing inflation was the same as the preceding month at 3.2%.
Fuel and light inflation was 2.55% in June compared to 2.8% in May.
