Consumer price inflation fell to a record low of 1.54% in June following a drop in food prices, government data showed on Wednesday, Reuters reported. In May, CPI stood at 2.18%, which was also a record low.
June’s inflation figure is the lowest since India started releasing retail inflation data in January 2012. The data is based on a combined CPI index for rural and urban consumers.
The cost of food and beverages shrunk 1.17% in June, those of vegetables by 16.53%, and pulses became 22% cheaper. Food prices are expected to remain stable with normal monsoon predicted this year.
Retail food prices fell to 2.12% in June year on year, compared with a 1.05% fall in May. Industrial output rose 1.7% in May after growing 3.1% in April.
A Reuters poll of more than 30 economists had expected prices to cool to 1.70%. Analysts believe this will put pressure on the Reserve Bank of India to cut interest rates, reported The Times of India.
The RBI had kept its benchmark interest rate unchanged in June. Its Monetary Policy Committee, which is scheduled to meet next month, may be forced to introduce a rate cut going by the latest inflation figures, reported NDTV.