India's retail inflation remained almost steady at 7.01 per cent month-on-month (MoM) in June, but stayed well above the upper limit of the Reserve Bank of India's (RBI's) target range for the sixth consecutive time, according to data released by the Ministry of Statistics and Program Implementation on Tuesday. This comes as the country witnesses lower fuel and cooking oil prices offsetting higher services and food costs.
The RBI has been mandated by the government to keep retail inflation at 4 per cent with a margin of 2 per cent on either side.
The CPI-based inflation stood at 7.04 per cent in May, 7.79 per cent in April, 6.95 per cent in March, 6.07 per cent in February and 6.01 per cent in January.
Food inflation, which accounts for nearly half the CPI basket, eased to 7.75 per cent, marginally lower than 7.97 per cent in the previous month.
Despite a substantial recent increase in food prices, rising at the fastest pace in nearly two years, overall inflation was partly contained after the government cut taxes on petrol and diesel and imposed restrictions on food exports.
"Upside risks to India's inflation appear to be easing as global commodity prices correct amid concerns over the global slowdown and as the rise in domestic food prices begins to ebb," said Garima Kapoor, Economist — Institutional Equities, Elara Capital.
"With today's print, Q1FY23E CPI inflation is undershooting RBI's projected inflation of 7.5% by 22 bps. We see incremental upside risks to CPI inflation easing off, with FY23E CPI at 6.5% with risks balanced vs earlier expectations of upside risks of 20-30 bps," Kapoor added.
The central bank has raised interest rates by 90 basis points so far this year to 4.9 per cent and is set to add more in coming months. RBI Governor Shaktikanta Das said recently inflation was unlikely to fall within the top end of its mandated target band until December.
Moreover, wholesale price inflation in May surged to three-decade high of 15.88 per cent.
Meanwhile, the country's industrial output, measured by the Index of Industrial Production (IIP), accelerated at 19.6 per cent in May as against 7.1 per cent in April, the government data showed.
The indices of industrial production for the mining, manufacturing and electricity sectors for the month of May stand at 120.1, 134.5 and 199.9, respectively, the National Statistical Office (NSO) stated.
The manufacturing sector posted a growth of 20.6 per cent in May, while power generation soared by 23.5 per cent year-on-year during the month under review. Mining output jumped by 10.9 per cent in May.
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