Retail Inflation Eases To 7.01% In June, Above RBI's Target Band For 6th Straight Month

India’s retail inflation eased marginally to 7.01 per cent in the month of June, according to data released by the Ministry of Statistics & Programme Implementation (MoSPI) released on Tuesday. 

The retail inflation, measured by the Consumer Price Index (CPI), eased in the month of June owing to easing crude and edible oil prices but remained above the Reserve Bank of India's (RBI) target band of 2-6 per cent for the sixth successive month. The downward trend in CPI-based inflation can also be attributed to excise duty cuts on petrol and diesel coupled with imposed curbs on food exports.

The retail price inflation for the month of May, eased to 7.04 per cent after touching an eight-year high of 7.79 per cent in April, but still remained over and above the RBI threshold of 6 per cent for the fifth consecutive month. 

The June retail inflation will be factored in by the RBI in its next bi-monthly monetary policy which will be announced in early August. The CPI-based inflation has remained above 6 per cent since January this year pushing the central bank to go for two successive hikes in key policy rates.

Last month, the RBI in its bi-monthly monetary policy review hiked the benchmark repo rate by a sharp 0.50 per cent to 4.90 per cent to tame spiralling prices. The central followed an off-cycle meeting on May 4, when it raised the repo rate by 0.40 per cent.

Speaking at Kautilya Economic Conclave on July 9, RBI Governor Shaktikanta Das exuded confidence that inflation will gradually improve in the second half of the current fiscal.

He added that the central bank would continue to take monetary measures to rein in inflation with a view to achieving strong and sustainable growth. Das further stated that price stability is key to maintaining macroeconomic and financial stability and the RBI will take measures for preserving and fostering macroeconomic stability.

RBI, which factors in the CPI in its monetary policy, in June raised the inflation projection for the current financial year to 6.7 per cent from its previous estimate of 5.7 per cent.