Retail Inflation up to 4.4% on costlier food, transport

New Delhi: India's retail inflation climbed to 4.4% in June, exceeding the central bank's 4% target, due to higher food and transport costs, according to government data released Monday. The June print is the highest under the revised Consumer Price Index (CPI) series introduced in January with 2024 as the base year.

Retail inflation was 3.9% in May.

"Inflation in June, the first full month after the hikes in petrol and diesel prices, accelerated to 4.4%, led by the food and beverages, transport, and restaurants divisions," said Aditi Nayar, chief economist at ratings firm ICRA.


Sakshi Gupta, principal economist at HDFC Bank, said the pressure from fuel and food inflation was partly offset by a moderation in core inflation, mainly due to the sequential fall in gold and silver prices. Core inflation was 3.9% in June.

Food inflation accelerated to 5.3% from 4.8% in May, crossing the 5% mark for the first time under the new series. Rural food inflation was 5.5%, higher compared with 5.1% in urban areas.

Food contributed around 185 basis points (1.85 percentage points) to the headline inflation, while non-food inflation accounted for 250 bps.

"Uneven rainfall so far, a below-normal monsoon forecast, and onset of El Nino conditions could put pressure on food prices," said Dipti Deshpande, senior director and principal economist at Crisil.

Economists expect RBI's Monetary Policy Committee to maintain status quo on policy rate at its meeting in August. The policy rate was unchanged at 5.25% in the June meeting. "While the material easing in crude oil prices has reduced the likelihood of an early rate hike, the renewal of tensions in West Asia warrants some caution," said Nayar.