Retail price gains registered a surprise acceleration last month with June’s provisional Consumer Price Index (CPI) reading showing inflation snapping a five-month downtrend and quickening to 5.08%, 28 basis points faster than the 4.80% logged in May.
Year-on-year food price inflation based on the Consumer Food Price Index (CFPI) quickened by 67 basis points in June to a worrying 9.36%.
It is precisely this kind of unpredictability in food price gains that monetary policymakers have been concerned about in opting to leave interest rates unchanged.
Food price data show that the CFPI’s nine sub-categories posted month-on-month gains, with eight of them, except the sugar and condiments group, registering sequential accelerations.
Vegetables continued to experience the most intense price gains, rising 29.3% year-on-year and by a worrying 11-month-high sequential pace of 14.2%.
The most widely consumed potato, onion and tomato continued to log some of the fastest gains, with their prices rising year-on-year by 57.6%, 58.5% and 26.4%, respectively.
IMD data as on July 14 reveal that countrywide precipitation since June 1 was still not only at a 2% deficit, but also spatially skewed.
Eleven of India’s 36 meteorological sub-divisions were still classified ‘deficient’, meaning these regions had received 20%-59% lower rainfall than the long-period average.
With some key food growing areas including Punjab seeing deficient rains, policymakers face an unenviable task in trying to slow the pace of inflation.
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