June retail inflation eases to 6.26%

Retail inflation

India’s retail inflation in the month of June eased to 6.26%, staying above the Reserve Bank of India’s comfort zone for a second straight month. It was 6.30% in May.

During the month, prices of eggs, edible oils, fruits, accelerated in double digits. Fuel inflation also grew 12.7% with rising petrol and diesel prices. Cost of transport communication also shot up with rising fuel prices.

As per the July 5-7 poll of 37, economists showed retail inflation rose to 6.58% in June from a year ago.

Meanwhile, the country’s factory output for the month of May rose 29.3% in May from a year earlier, government data showed on Monday. The sharp rise was due to base effects as the country was under a strict lockdown during the same period last year.

While many of India’s states have eased restrictions imposed to contain the coronavirus, supply-side disruptions remain and higher taxes on petroleum products continue to exert upward pressure on inflation.

A recovery in global demand has driven a rally in commodity prices, including crude oil which contributed to record-high fuel prices in India.

Fuel prices have risen over 30% from May of last year, driving prices up across the board. Analysts expect high fuel prices and rising input costs for companies to keep inflation elevated for some time.

The RBI is facing the difficult conundrum of balancing growth-inflation dynamics.
While the RBI’s focus remains on growth, minutes of the June meeting showed the Monetary Policy Committee would remain watchful on inflation.

News Source: Moneycontrol

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