Despite the decline in the inflation numbers, the price rise indicator remained above the upper limit of the Reserve Bank of India’s prescribed range for the sixth straight month. The central bank aims to keep retail inflation in the range of 2% to 6%.
Food inflation also dropped marginally to 7.75% in June from 7.97% in May. The price rise in vegetables was highest at 17.37%, followed by spices at 11.04%, oil and fats at 9.36% and meat and fish at 8.61%.
Union Finance Minister Nirmala Sitharaman said that according to estimations made by the Reserve Bank of India, the government and the central bank need to be mindful about the price rise till the start of the second half of the fiscal year in October, reported PTI.
“We will have to be mindful and watchful how the price movement is,” she told reporters on Tuesday evening. “I will keep monitoring [prices] item by item for anything that goes haywire. This pointed attack on inflation will need to continue.”
On July 9, RBI Governor Shaktikanta Das had said that inflation in India could cool down in the second half of this financial year. Das had said that while factors beyond control may affect inflation in the short run, the medium-term trajectory is determined by monetary policy.
The central bank takes into account retail inflation in its bi-monthly monetary policy.
In May, the Reserve Bank of India’s monetary policy committee had raised the repo rate by 40 basis points to 4.40% with immediate effect due to inflationary pressures. The repo rate is the interest rate at which the central bank lends to commercial banks. This was the first-rate hike since August 2018. The move had raised borrowing costs for corporates and individuals.
Retail inflation had climbed to 7.79% in April – the highest in eight years. It has eased since then though marginally.
Industrial production growth at 19.6% in May
Meanwhile, the growth in India’s industrial production was recorded at 19.6% in May as compared to 27.6% in the same month last year, data released by the government on Tuesday showed.
The growth in manufacturing sector was 20.6% in May against 32.1% in the same period in 2021. The mining output dropped to 10.9% this month as opposed to 23.6% in May 2021. Power generation increased to 23.5% in May from 7.5% in the same period last year.