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CPI inflation surges to eight month high of 5.4% in June

14 Jul 2015 Evaluate

Surging to its eight month high, the retail or the Consumer Price Index (CPI) inflation for the month of June recorded 5.4 percent, compared to 5.01 percent in May and 6.77 percent in June last year, mainly due to costlier food items. As per the data of Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation the Consumer Food Price Index (CFPI) increased to 5.48 percent in June compared to 4.80 percent in May and 7.21 percent in June 2014.

The General Indices (Provisional) for the month of June 2015 for Rural, Urban and Combined stood at 124.1, 121.7 and 123.0 respectively, while the CFPI for Rural, Urban and Combined for the same month were recorded at 126.2, 128.6 and 127.1 respectively.

The sharp rise in the inflation numbers were due to rise in food inflation, which sequentially showed jump of more than 60 basis points. Not only vegetable and pulses prices increased but there was spike up in protein items. As per the data released by the CSO, prices of pulses rose by 22.24% in June year-on-year, while the inflation for fruit and vegetables was 3.51% and 5.37%, respectively, in the month under review. Among others, milk and its products inflation increased by 7.18% in June over the same month last year.

Most strikingly, the data showed that prices of protein-rich items like meat and fish rose by 6.99%, while spices turned costlier by 9.71% in the month. Among other categories, oils and fats prices rose by 3.06%, cereals and products by 1.98%, while that of egg rose by 5.09% in June. Some respite came from the front of sugar and confectionery items front where the prices fell by 8.55% in June compared to same month last year.

The rise in inflation, a key factor considered by the RBI in deciding the bi-monthly monetary policy is likely to limit its rate coming room in upcoming policy review, the spike has once again taken the numbers close to RBI’s revised annual target of 6 percent. Though, government might be downplaying the spike-up as a blip and expects it to come down on the back of better monsoon and favourable base effect next month, but the costlier food item is likely to prompt RBI to press the pause button on rate cuts.

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