Customers buy fruits and vegetables at an open air evening market in Ahmedabad, India. - Reuters
NEW DELHI: India's retail inflation rate rose for the first time in five months in June due to a sharp rise in food prices, government data showed on Friday (July 12).
Annual retail inflation was 5.08 per cent in June, up from 4.75 per cent in May. Economists polled by Reuters had forecast inflation at 4.80 per cent.
Prices of food, which account for nearly half of the retail inflation, rose 9.36 per cent from last year in June compared to an 8.69 per cent rise in May.
Food prices have been accelerating at more than 8 per cent year-on-year since November 2023.
Vegetable prices rose 29.32 per cent in June against 27.33 per cent in the previous month, as extreme heat and heavy floods in India's northern states disrupted agricultural production.
"The heatwave impact has been seen on vegetables... These products will continue to witness high inflation," said Madan Sabnavis, economist at Bank of Baroda.
Higher rural inflation coupled with food prices "is a cause of concern both for consumption and investment growth," said Devendra Pant, an economist at India Ratings.
For June, rural inflation was 5.66 per cent compared to 4.39 per cent in urban areas, government data showed.
Inflation rate for cereals was 8.75 per cent in June compared to 8.69 per cent in the previous month, while that of pulses eased to 16.07 per cent from 17.14 per cent.
Core inflation, which strips out volatile food and energy prices, continued to hover around 3 per cent and was estimated between 3.08 per cent and 3.14 per cent in June from 3.12 per cent in May, according to three economists.
The Indian government does not release core inflation data.
High food prices have led to the Reserve Bank of India (RBI) keeping its key interest rate unchanged at 6.50 per cent for eight consecutive meetings.
RBI Governor Shaktikanta Das on Thursday said it will be too early to talk about a change in the monetary policy stance till inflation is somewhere close to the central bank's 4 per cent target.
"Any rate action can be considered only in October, and will be heavily data dependent," Sabnavis said. - Reuters
