India’s Retail Inflation Falls to 7.01% In June 2022

India's Retail Inflation, measured by the Consumer Price Index or CPI fell to 7.01% in June against 7.04% in May, 2022, according to data released on Tuesday by the statistics ministry.

"The CPI reached 7.01 percent due to higher edible oil and other commodities. Food prices, which account for nearly half of the inflation basket, will remain high due to supply chain issues, crude oil price increases amidst geopolitical tensions. Commodity prices have risen, leaving businesses with no choice but to pass the increased costs onto end users. Inflationary pressures have been felt by every Indian household that is struggling financially," said DRE. Reddy, CEO and Managing Partner at CRCL LLP.

Meanwhile, experts and economists had earlier anticipated that the retail price inflation may hover in the range of 7% or a little above it in June.

According to a Reuters poll, India's inflation is likely to hold above the central bank's tolerance band for at least the remaining of 2022, longer than previously anticipated, making several more interest rate hikes in coming months all but inevitable. This is despite the slew of measures taken by the government pertaining to tax structure imposed on crucial commodities, excise duty cut on petrol and diesel to control the rising inflation.

Meanwhile, The Reserve Bank of India (RBI), which factors in the CPI in its monetary policy, had in June elevated the inflation forecast for the current financial year to 6.7% from its previous estimate of 5%.

The retail price inflation for the month of May was 7.04% and 7.79% in April this year. Earlier this year on May 21, Finance Minister Nirmala Sitharaman cut excise duty on petrol by Rs 8 per litre and Rs 6 per litre on diesel in order to keep the soaring inflation under control. For the month of March, inflation based on CPI Index was recorded at 6.95%.