June retail inflation higher than expected
Food Price Index (CFPI), which accounts for nearly half of the overall consumer price basket, rose to 4.49% in June 2023 against 2.96% (revised) in May 2023. During June 2022, CFPI stood at 7.75%. Economists said inflation could cross 5% in the next two months on a continued rise in prices of vegetables, pulses and cereals.
“The spike in vegetable prices is set to push CPI inflation to an uncomfortable 5.3-5.5% in July 2023," said Aditi Nayar, chief economist, Icra Ltd. “We expect the vegetable price shock to result in the Q2 FY2024 CPI inflation exceeding the monetary policy committee’s last forecast of 5.2%," Nayar said. “Amid the ongoing excess rainfall in north India, the surge in the prices of perishables, particularly vegetables, is likely to harden food inflation further in the immediate term.
Besides, the impact of El Nino on monsoon and sowing in India needs to be carefully monitored," she added. Food inflation was driven highlighted by cereal inflation, which continued in double digits, whereas eggs, milk, pulses, and spice inflation rose due to limited supply. Core inflation also cooled slightly to 5.2% but was still trending above the headline inflation, economists said.
“The food basket is beginning to bite with inflation of 4.6% here. The major elements driving this inflation are cereals (12.7%), eggs (7%), milk (8.6%), pulses (10.5%) and spices. Edible oil has helped to push down inflation with -18.1% inflation," said Madan Sabnavis, chief economist at Bank of Baroda.
Read more on livemint.com
