India’s headline retail inflation rate marginally eased in June to 7.01 per cent, but well above the Reserve Bank of India’s (RBI’s) tolerance band for sixth consecutive month as lower fuel and cooking oil prices offset higher services and food costs, Ministry of Statistics and Programme Implementation showed on Tuesday.
Overall inflation was partly contained after the government cut taxes on petrol and diesel and imposed restrictions on food export despite a substantial recent increase in food prices, rising at the fastest pace in nearly two years.
The consumer price index (CPI) based inflation stood at 7.04 per cent in May and 6.26 per cent in June 2021. Inflation in the food basket in June 2022 was 7.75 per cent, compared to 7.97 per cent in the preceding month, according to the National Statistical Office (NSO) data.
The RBI has been asked to ensure that inflation remains at 4 per cent with a margin of 2 per cent on either side. The retail inflation is ruling above the RBI’s upper tolerance limit of 6 per cent since January 2022.
The latest forecast by the central bank pegs average CPI inflation for July-September at 7.4 per cent.
So far this year, the RBI has raised interest rates by 90 basis points to 4.9 per cent and is set to add more in coming months if the headline inflation doesn’t fall below the central bank’s prescribed limit.
RBI Governor Shaktikanta Das said recently inflation was unlikely to fall within the top end of its mandated target band until December.
On the other hand, the manufacturing sector’s output grew 20.6 per cent in May 2022, according to the Index of Industrial Production (IIP) data by the National Statistical Office (NSO).
The Index of Industrial Production (IIP) had grown 7.1 per cent in April this year after remaining subdued for the preceding seven months.
In May 2022, the mining output climbed 10.9 per cent, and power generation increased 23.5 per cent. The IIP had grown by 27.6 per cent in May 2021.
Industrial production has been hit due to the coronavirus pandemic since March 2020, when it had contracted 18.7 per cent.
It shrank 57.3 per cent in April 2020 due to a decline in economic activities in the wake of the lockdown imposed to curb the spread of coronavirus infections.