Retail inflation likely rose to 4.6% in June on vegetable prices; to stay within RBI's target in 2023
inflation data will be released this week. Expectations are at 4.6 per cent, higher from May at 4.25 per cent mainly due to higher vegetable prices amid unseasonal rains causing supply disruptions. Further, we expect core CPI inflation at 5.2 per cent - higher by 5 bps from the May reading,'' said Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank.
One basis point is equal to one-hundredth of a percentage point. However, CPI inflation is likely to remain below the Reserve Bank of India's upper tolerate limit of 6 per cent for the rest of the financial year. There are upside risks to inflation, mainly from El Nino impact on monsoon, according to the July edition of Netra report by DSP Mutual Fund.
Inflation momentum is moderating in a broad-based manner. Further, a lower core CPI is led by slower goods inflation, which reflects declining international commodity prices like crude oil, metals and even food, according to DSP. ‘’Food inflation is a seasonal phenomenon, if considered from a cyclical perspective, it is expected to be manageable.
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