India's retail inflation eased marginally to 7.01 percent in the month of June, 2022, over and above the Reserve Bank of India’s (RBI) threshold of 6 percent, data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed on July 12.

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Inflation in the food basket in June 2022 was 7.75 percent, compared to 7.97 percent in the preceding month, as per the National Statistical Office (NSO) data.

As per the data, the inflation print in vegetables eased to 17.37 percent during the month from 18.26 percent in May, while for 'pulses and products' it slowed to (-) 1.02 percent against (-) 0.42 percent.

However, the rate of price rise in 'cereals and products' moved up to 5.66 percent, from 5.33 percent in the preceding month. Inflation in the 'fuel and light' category rose to 10.39 percent as against 9.54 percent, while that for fruits increased to 3.10 percent from 2.33 percent.

In May 2022, retail inflation stood at 7.04 percent. In the month before, it had hit an eight-year high of 7.78 percent. The retail inflation has remained above 6 percent since January this year, forcing the central bank to go for two back-to-back repo rate hikes.

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Last month, the RBI, in its bi-monthly monetary policy review raised the benchmark repo rate — at which it lends short-term money to banks — by a sharp 0.50 percent to 4.90 percent to rein in spiralling prices. It followed an off-cycle meeting on May 4, when the central bank hiked the repo rate by 0.40 percent.

RBI Governor Shaktikanta Das, while speaking at Kautilya Economic Conclave on July 9, had exuded confidence that the price situation will gradually improve in the second half of the current fiscal.

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He also said the central bank would continue to take monetary measures to anchor inflation with a view to achieving strong and sustainable growth.

The governor said price stability is key to maintaining macroeconomic and financial stability and the central bank will undertake measures for preserving and fostering macroeconomic stability.

The RBI, which factors in the CPI in its monetary policy, had in June raised the inflation forecast for the current financial year to 6.7 percent from its previous estimate of 5.7 percent.

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Aditi Nayar, Chief Economist at ICRA, said the cut in excise duty on petrol and diesel drove the downtrend in the transport and communication sub-index of miscellaneous items, whereas the services sub-indices reported a pickup in inflation that needs to be watched very carefully.

"We continue to foresee front loaded rate hikes of 60 bps spread over the next two policy reviews followed by an extended pause, as the MPC will focus on containing inflationary expectations without sacrificing growth," Nayar said.

First Published:Jul 12, 2022 5:39 PM IST