Retail inflation drops to 'historical low' level of 1.54% in June

 Retail inflation hit a "historically low" level of 1.54% in June on dip in food items like vegetables, pulses and milk products, which may prompt the Reserve Bank to go in for rate cut next month.

"The number of 1.54% is historically low and reflects the firm and ongoing consolidation of macro economic stability," Chief Economic Adviser Arvind Subramanian told reporters. "The last time we saw such inflation -- according to slightly different CPI (IW) -- was in 1999 and before that in August 1978," he added. The latest series of Consumer Price Index (CPI) was introduced in January 2012.

Inflation in the previous month - May this year - was 2.18%. On the other hand, in June last year, it was 5.77%. As per the data released by Central Statistics Office, inflation in the food basket as a whole contracted further to 2.12% last month as compared to (-)1.05% in May. Vegetables inflation declined to 16.53 and that of pulses and products to 21.92%.

There was decline in rate of price in eggs (-0.08%). On the other hand, the protein rich meat and fish turned costlier as the inflation spiked to 3.49% in June from 1.87% in May. Fruits too were dearer on monthly basis. The retail inflation in the fuel and light segment slowed to 4.54% as compared to 5.46 in May.

The Reserve Bank, which mainly factors in retail inflation to arrive at its monetary policy, is slated to meet in early August to announce the next bi-monthly policy rate. In its last policy in June, the central bank had kept the key lending rate unchanged citing risk to inflation.