New Delhi: Economists say India’s headline retail inflation for June has broadly matched expectations, with the progress of the southwest monsoon expected to play a crucial role in determining inflation trends over the coming months.
India’s Consumer Price Index (CPI)-based inflation stood at 4.38 per cent in June. Experts believe inflation is likely to remain within the 4–4.5 per cent range over the next two quarters, with food prices continuing to be the biggest factor amid uneven monsoon progress and the possibility of El Niño-related rainfall fluctuations.
Among individual commodities, silver jewellery recorded the sharpest annual price increase at 133.21 per cent, while gold jewellery prices rose by 36.82 per cent. Overall food inflation stood at 5.32 per cent during the month.
Madan Sabnavis, Chief Economist at Bank of Baroda, said higher crude oil prices had begun to filter into retail fuel costs, pushing transport inflation to 4.3 per cent.
He noted that while easing global gold and silver prices could help moderate inflation in the personal care segment, favourable base effects would keep inflation elevated for some time. Looking ahead, he expects the current inflation trend to continue, with food prices remaining closely linked to monsoon performance.
Radhika Rao, Senior Economist and Executive Director at DBS Bank, said June inflation came in slightly above market expectations, reflecting the continued normalisation of food prices and the impact of fuel price hikes introduced in mid-May.
She added that investors are closely monitoring the regional distribution of the southwest monsoon. Encouragingly, the nationwide rainfall deficit narrowed significantly in July to around 15 per cent, compared with more than 40 per cent at the end of June, with key agricultural regions in central and northwestern India receiving improved rainfall.
Rajeev Sharan, Head of Research at Brickwork Ratings, said inflation still faces upside risks from a possible rebound in crude oil prices and continued strength in precious metals. However, a favourable monsoon could help cool food inflation and provide room for the Reserve Bank of India to maintain its supportive monetary policy stance.
With inputs from IANS