India’s Inflation Rises in June 2024 Due to Higher Food Prices

New Delhi [India], July 12, 2024: India’s retail inflation rate increased in June, breaking the trend of moderation seen in previous months. The year-on-year inflation rate based on the Consumer Price Index (CPI) is 5.08% for June 2024. Rural inflation is at 5.66% and urban inflation is at 4.39%.

Food prices have been a significant concern for policymakers. Government data showed that prices for cereals, meat, fish, eggs, milk, oils, fruits, vegetables, pulses, sugar, spices, and snacks rose month-on-month. Data was collected from 1114 urban markets and 1181 villages across all states and union territories.

In May, annual retail inflation was at a 12-month low of 4.75%, slightly down from 4.83% in April. December’s inflation was 5.7%, and it had been moderating since then. Although the inflation rate is within the Reserve Bank of India’s (RBI) comfort level of 2-6%, it is above the ideal 4% target.

Inflation is a global concern, but India has managed its inflation trajectory well. The recent rise in food prices has interrupted the disinflation process, posing challenges to reaching the 4% target. The RBI has maintained the repo rate for the eighth consecutive time, after raising it by 250 basis points since May 2022 to combat inflation. The repo rate is the interest rate at which the RBI lends to other banks.

The next CPI release is scheduled for August 12, 2024.