India’s retail inflation rose to 5 per cent in June which is the highest in five months, according to a data released by the government on Thursday. The retail inflation was 4.87 per cent in May while in June last year it was 1.46 per cent. The last time it reached a high of more than 5 per cent was in January when it touched 5.17%.
Based on Consumer Price Index (CPI) the hike was witnessed in retail inflation despite easing food prices. According to a data released by the Central Statistics Office (CSO) the inflation in the food basket was 2.91 per cent, compared to 3.1 per cent in May.
Inflation in fuel, however, has spiked up to 7.14 per cent from 5.8 per cent in May.
The government has mandated the Reserve Bank to keep inflation at 4 per cent, with a margin of 2 per cent on either side. The Monetary Policy Committee (MPC) headed by the RBI Governor will be meeting later this month to review interest rate regime.
Inflation in clothing and footwear in June stood at 5.67 per cent and in housing category at 8.45 per cent, both marginally higher than the previous month, as per the data.
After MPC meeting in June, the RBI had raised its key short-term benchmark lending rate (repo) to 6.25 per cent up by 0.25 per cent. The repo rate hike came after almost four-years based on inflationary concerns. The MPC will be meeting for three-days from July 30 and announce its decision on the third bi-monthly policy of the current fiscal on August 1.