India’s Retail Inflation in 2024: Rising Food Prices and Monsoon Impact
India’s retail inflation, measured by the Consumer Price Index (CPI), is expected to stay around 5% for most of 2024-25, except in September, according to SBI Research. June saw a rise to 5.08% due to increasing food prices. The rural and urban inflation rates were 5.66% and 4.39%, respectively.
State-wise Inflation Rates
| State | Inflation Rate |
|---|---|
| Odisha | 7.22% |
| Bihar | 6.37% |
| Karnataka | 5.98% |
Odisha recorded the highest inflation rate at 7.22%, followed by Bihar at 6.37% and Karnataka at 5.98%.
Food Inflation
Food inflation nearly doubled to 8.36% in June, compared to 4.63% in the same month of 2023. Government data showed that prices for all food segments, including cereals, meat, eggs, milk, oils, fruits, vegetables, pulses, sugar, spices, snacks, and sweets, rose month-on-month.
RBI’s Role
The Reserve Bank of India (RBI) aims to keep inflation within 2-6%, ideally at 4%. Despite recent pauses, the RBI has raised the repo rate by 250 basis points since May 2022 to combat inflation. The next RBI policy meeting is scheduled for early August.
Global Context
US inflation dropped to 3%, possibly leading to a Fed rate cut by September. This could influence the RBI’s policy stance around that time.