June's Food Inflation Drives Up Overall CPI to 5.1%

In June, food inflation surged significantly to 9.4%, lifting the Consumer Price Index (CPI) inflation to 5.1% from 4.8% in May, driven by high vegetable prices. Non-food inflation eased, but rural residents faced higher inflation burdens.

In June, a surge in food inflation to 9.4% propelled the overall Consumer Price Index (CPI) inflation to 5.1%, up from May's 4.8% according to a CRISIL report. The spike was largely driven by steep increases in vegetable, cereal, milk, and fruit prices.

The base effect from last year provided some support, but persistent high vegetable prices—averaging in double digits for eight consecutive months—were a major concern. In June, vegetable inflation soared to 29.3%, compared to 27.4% in May, affecting both TOP (tomatoes, onions, potatoes) and non-TOP vegetables.

TOP vegetables witnessed a dramatic rise with inflation reaching 48.4%, particularly onions at 58.5% and potatoes at 57.6%. Tomato inflation, however, eased to 26.4% from 41.3% due to last year's high base. Non-TOP vegetables saw inflation rise to 19.7% from 18.8%, driven by leafy greens, brinjal, lady’s finger, and pumpkin.

Foodgrain inflation held steady at 10.2%, slightly down from the previous month. Cereal inflation edged up to 8.8% (from 8.7%), mainly due to non-PDS wheat. Pulses inflation marginally decreased to 16.1%, with arhar dal noting a sharp decline to 26.9%. Meanwhile, other pulses such as masur and split gram saw an increase.

Milk prices climbed for the first time in 13 months due to price hikes by major producers. Edible oils continued a lower disinflation trend, marking the fifth consecutive month of negative inflation. Spices inflation softened for the 10th straight month.

Fuel prices fell by 3.7% year-on-year in June, remaining in deflation for the 10th consecutive month. The decline was influenced by lower global oil prices and government subsidies for LPG. Electricity inflation moderated, with slight increases noted in firewood and woodchips prices.

Non-food inflation continued a 17-month easing trend, hitting a record low of 2.3%. Core inflation remained unchanged at 3.1%. Despite easing in services inflation, personal care inflation rose due to higher gold prices.

Education inflation declined due to softer tuition fees. Rural inflation rose to 9.2%, outpacing urban inflation which edged up slightly. Rural areas faced higher overall inflation pressures, particularly in core and fuel categories, compared to urban areas.