As per the latest data releases, the retail inflation in India increased, hitting 5.08 per cent in June 2024, largely driven by higher food prices.
Inflation Breakdown
Retail inflation, measured by the Consumer Price Index (CPI), captures the change in the price level of a basket of consumer goods and services.
The CPI-based retail inflation was 4.8 per cent in May 2024 and 4.87 per cent in June 2023.
In the latest development, this recent surge to 5.08 per cent is largely attributed to the rise in food prices, which surged to 9.36 per cent in June from 8.69 per cent in May.
Food Prices
The data from the National Statistical Office (NSO) highlighted that food prices across various categories have increased. Here is the breakdown of it-
1) Vegetables: Inflation soared to 29.32 per cent
2) Pulses and Products: Up by 16.07 per cent
3) Cereals and Products: Also saw a significant surge
4) Fruits, Meat, Fish, Eggs, Dairy, Oils, Fats, Sugar, Spices, Snacks, and Sweets: All recorded higher prices
Urban Versus Rural Inflation
The NSO data also highlighted about the disparity between urban and rural inflation rates.
In rural areas, retail inflation was higher at 5.66 per cent, compared to 4.39 per cent in urban regions.
RBI's Monetary Policy
The Reserve Bank of India (RBI) is tasked with maintaining CPI inflation at 4 per cent, with a 2 per cent margin on either side.
The RBI had projected CPI inflation for 2024-25 at 4.5 per cent, with quarterly estimates as Q1- 4.9 per cent; Q2 - 3.8 per cent; Q3 - 4.6 per cent; and Q4 - 4.5 per cent.
Since May 2022, the central bank has raised the repo rate by 250 basis points to combat inflation.
