Retail inflation eases a tad to 7.01 pc in June; above RBI's comfort zone for 6th straight month

However, retail inflation is ruling above the RBI's upper tolerance limit of 6 percent since January 2022. As per the data, the inflation print in vegetables eased to 17.37 percent during the month from 18.26 percent in May, while for pulses and products it slowed to - 1.02 percent against -0.42 percent. However, the rate of price rise in cereals and products moved up to 5.66 percent, from 5.33 percent in the preceding month.

Retail inflation dropped marginally to 7.01 percent in June mainly due to a slight easing in prices of vegetables and pulses, though it remained above the Reserve Bank's comfort level for the sixth month in a row.

The consumer price index (CPI) based inflation stood at 7.04 percent in the preceding month of May and 6.26 percent in June 2021.

Inflation in the food basket in June 2022 was 7.75 percent, compared to 7.97 percent in the previous month, as per the National Statistical Office (NSO) data released on Tuesday.

The RBI has the mandate to ensure that inflation remains at 4 percent, with a margin of 2 percent on either side. However, retail inflation is ruling above the RBI's upper tolerance limit of 6 percent since January 2022.

As per the data, the inflation print in vegetables eased to 17.37 percent during the month from 18.26 percent in May, while for 'pulses and products' it slowed to (-) 1.02 percent against (-)0.42 percent.

However, the rate of price rise in 'cereals and products' moved up to 5.66 percent, from 5.33 percent in the preceding month. Inflation in the 'fuel and light' category rose to 10.39 percent as against 9.54 percent, while that for fruits increased to 3.10 percent from 2.33 percent.

Last month, the Reserve Bank in its bi-monthly monetary policy review raised the benchmark repo rate -- at which it lends short-term money to banks -- by a sharp 0.50 percent to 4.90 percent to rein in spiraling prices. It followed an off-cycle meeting on May 4, when the central bank hiked the repo rate by 0.40 percent.

Governor Shaktikanta Das had said the global geopolitical situation remains fluid and commodity markets remain on the edge, rendering heightened uncertainty to the domestic inflation outlook.

However, certain positive developments such as expectations of a normal south-west monsoon and Kharif agricultural season, recent supply-side measures taken by the government as well as the lifting of the palm oil export ban by Indonesia may help ease the acute price pressures to some extent, he had said.

The RBI also raised its retail inflation forecast for the current financial year to 6.7 percent from its previous estimate of 5.7 percent.

On Saturday, the RBI Governor while speaking at the Kautilya Economic Conclave exuded confidence that the price situation will gradually improve in the second half of the current fiscal.

He also said the central bank would continue to take monetary measures to anchor inflation to achieve strong and sustainable growth.

The Governor said price stability is key to maintaining macroeconomic and financial stability and the central bank will undertake necessary measures for the same.