India’s June retail inflation eased up on a sequential basis but still managed to remain above the 6 per cent threshold, according to data provided by the National Statistical Office (NSO).

The same data showed that the Consumer Price Index (CPI) slipped to 6.26 per cent last month from 6.30 per cent in May.

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Region-wise, the CPI Urban rose to 6.37 per cent last month from 5.91 per cent in May, and the CPI Rural climbed to 6.16 per cent in June from 6.55 per cent in May.

As per the NSO data, the Consumer Food Price Index increased to 5.15 per cent last month from 5.01 per cent in May. The CFPI readings measure the changes in retail prices of food products.

The macro-economic data assumes significance as it is still above the retail inflation range of the Reserve Bank of India, which has set a range of 2-6 per cent for retail price-based inflation.

The high retail inflation reduces the chance of the RBI to loosen up the monetary policy further.

In terms of CPI YoY inflation rate, pulses and products’ prices jumped higher by 10.01 per cent in June 2021.

Meat and fish prices rose 4.83 per cent, eggs became dearer by 19.35 per cent and the overall price of food and beverages category was up 5.58 per cent.

However, vegetable prices declined by 0.70 per cent.

Besides the official data, the inflation rate for fuel and light was at 12.68 per cent.

“The CPI inflation for June 2021 offered a modicum of relief, easing marginally to 6.26 per cent from 6.3 per cent in the previous month, despite a pickup in food inflation and rising retail fuel prices. However, it did remain above the upper threshold of the MPC’s 2-6 per cent medium term target for the second month in a row, and exceeded our projection of 6.1 per cent,” ICRA’s Chief Economist Aditi Nayar said.

“The month-on-month uptick in the CPI inflation eased to 0.6 per cent in June 2021 as the phased unlocking commenced at the state level, from the sharp 1.6 per cent in the previous month, adding heft to the argument that the latter was largely transitory.”

India Ratings & Research Principal Economist Sunil Kumar Sinha said: “Retail inflation in June 2021 moderate marginally to 6.26 per cent (May 2021: 6.30 per cent, June 2020: 6.23 per cent). Despite cereals deflation coming in at 1.9 per cent in June 2021 compared to 1.4 per cent in May 2021, higher inflation of eggs, oil and fats and pulses resulted in elevated food inflation at 5.15 per cent.”

“Going forward, while elevated food inflation of last year (from July 2020 to October 2020) will provide some comfort, elevated oil and fat inflation and recent milk price hike of around 4 per cent by Amul followed by other players such as Mother Dairy would keep food inflation high.”