Retail inflation rises to 5.77% in June; increase in pulses, vegetable prices to blame

Consumer Price Inflation (CPI), or retail inflation, continues to rise. 

As per data released by Central Statistics Office (CSO) of Ministry of Statistics & Programme Implementation (MoSPI), consumer price index (CPI) rose to 5.77% in June 2016 as against 5.76% in May 2016 and 5.40% in June of last year.  Moreover, consumer food price index (CFPI) rose to 7.79% in June 2016 as against 7.47% in May 2016 and 5.48% in June 2015. 

The data showed that on a month-on-month basis, retail and food inflation inched up by 1.17% and 2.39%, respectively.  Pulses and products from it saw the largest rise in inflation, at 26.86% on an year-on-year basis. This was followed by increase in sugar and confectionery prices which rose by 16.79% and vegetable inflation which was 14.74% in June 2016 as against the same month of last year.

CPI for the month of May had increased to 5.76% as against 5.4% in April, its highest in 21 months. Retail inflation is important as the Reserve Bank of India (RBI) uses this to frame its monetary policy. 

A higher retail inflation means RBI will be wary of interest rate cuts which will in turn lead to less money with banks to loan to industry. 

Originally published in zeebiz.com