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Retail inflation falls to 10.02% in June

Last Updated: Wednesday, July 18, 2012 - 20:01

New Delhi: Retail inflation declined marginally to 10.02 percent in June, providing no relief to the common man as prices of vegetables, edible oils and milk products shot up significantly.

The rate of price rise based on Consumer Price Index (CPI), which touched a high of 10.36 percent in May, slipped a little in June. However, it remained in double digits for the third month in a row.

Prices of vegetables turned costlier by 27.60 percent, followed by edible oils (16.58 percent) and milk products (12.75 percent) in June on an annual basis. Fruits rose at a lesser pace of 6.92 percent during the month.

The high inflation is likely to weigh on RBI which will review the interest rates on July 31.

According to economists, inflation still remains at an elevated level providing little room for RBI to ease interest rate in its upercentoming policy review.

RBI Governor D Subbarao has stated that inflation is above the comfort level of the central bank.

As per the official data released today, lower rate of price rise was noticed in spices, sugar and soft drinks.

The marginal decline in retail inflation has resulted due to 'high base effect' of Housing Index last year, which is also captured in the CPI computation.

Fuel and light category showed a rise of 10.34 percent for the month under review while clothing and footwear registered an increase of 11.04 percent.

According to the Minister of State (independent charge) for Statistics and Programme Implementation, Srikant Kumar Jena, provisional annual inflation of June for rural, urban and combined in respect of 'food and beverages' stood at 10.41 percent, 11.52 percent and 10.71 percent respectively.

Experts said that looking ahead, the biggest risk to consumer price index (CPI) is the outlook on food prices, which forms around 43 percent of the CPI basket.

These are likely to remain under pressure due to the recent increase in minimum support prices and shortfall in monsoon rains.

Nomura economist Sonal Varma said from a policy perspective, the RBI does not rely solely on the CPI series due to its limited history.

However, this is an important input as it reflects inflation faced by households, and as such, suggests that it is too early to lower the guard on inflation.

"We expect all policy rates to be left unchanged on 31 July," Varma added.

She said fuel price hikes are also pending.

As for WPI inflation, it declined in June to 7.25 percent from 7.55 percent with easing prices of manufactured goods.


First Published: Wednesday, July 18, 2012 - 11:47
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