India’s retail inflation increased to 4.81% in June from 4.25% in May, data from the Union Ministry of Statistics and Programme Implementation showed on Wednesday.
The inflation in rural areas in May stood at 4.72% and 4.96% in urban areas. Overall, food inflation in the country increased from 2.96% in May to 4.49% in June.
However, the indicator of price rise continued to be within the tolerance level of the Reserve Bank of India for the fourth consecutive month. The central bank aims to keep inflation between 2% and 6%.
The easing of the retail inflation came after the Reserve Bank of India on June 6 decided to keep the repo rate unchanged at 6.50%. The repo rate is the interest rate at which the central bank lends money to commercial banks.
Central banks typically increase key lending rates at times of high inflation in economies. Higher key lending rates translate into high interest on loans disbursed by commercial banks. This, in turn, keeps a check on discretionary spending by consumers which is expected to help them with price rises due to high inflation.
The central bank’s decision to maintain the status quo on the repo rate in April came after six consecutive hikes which saw the lending rates go up by 250 basis points, or 2.50%, since May last year.
Meanwhile, the Index of Industrial Production rose sharply to 5.2% on an annual basis in May from 4.5% in April and 1.1% in March, data released by the National Statistical Office showed.
The manufacturing sector’s output grew by 5.7% in May as against 4.9% in April, the data showed.