India's Retail Inflation Rises To 4.81% In June

New Delhi: India's annual retail inflation quickened in June, snapping four months of easing, due to surging prices for vegetables, government data showed on Wednesday. June retail inflation rose to 4.81 percent, higher than both the revised 4.31 percent for the previous month and the 4.58 percent expected in a Reuters poll of 55 economists.

"The higher-than-expected inflation has been led by vegetables, pulses, and protein-rich items. Weather-related disruptions are expected to keep prices of perishable food items elevated in the near term, says Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, Mumbai."

"Continued disruptions may pose a 20-25 bps upside to our average FY24 estimate of 5.1%. The Reserve Bank of India will remain cautious on these supply-side-hocks but we maintain our expectations of a pause on rates through the year."

"This trend in vegetable prices has continued in July too. Core inflation was broadly unchanged at 5.1% but will likely moderate over the next few months. Overall, we see upside risks to CPI inflation over the next few months as monsoon-related risks on food prices play out. The RBI will remain cautious and we continue to expect the RBI to remain on an extended pause as it watches for the domestic growth-inflation mix and global monetary policy decisions, says Suvodeep Prakshit, Senior Economist, Kotak Institutional Equities, Mumbai."

"The inclement weather-related surge in perishables inflation saw CPI inflation rise from a 25-month low of 4.25% in May 2023. We expect the monetary policy committee to see through the short-term spike in food inflation and remain on prolonged pause. Impending fuel price cuts and global commodity deflation led by weak growth in China will likely help to balance the spike in food inflation in the near term, says Garima Kapoor, Economist, Institutional Equities, Elara Capital, Mumbai."