NEW DELHI – Rising food prices accelerated from india annual retail inflation fee in Junebreaking four months of easing and erasing any chance of a central bank rate cut this year.
June retail inflation increased to 4.81 percent, higher that both the revised 4.31 percent from the previous month and the 4.58 percent expected in a Reuters poll of 55 economists.
Food inflationwhich represents almost half of the general basket of consumer prices, rose to 4.49 percent from a revised 2.96 percent in May.
Erratic, incessant rains in north India could push vegetables prices higher in the coming months. They increased 12 percent monthly in June.
“A less solidary base and the beginning of the peak in vegetables prices made the CPI rise inflation still higher that it anticipated 4.8 percent,” said Aditi Nayar, an ICRA economist.
Prices of vegetables will remain high in July and may push retail inflation to an “uncomfortable 5.3-5.5 percent” this month, Nayar added.
Tomato prices in particular rose sharply, leading to a rapid food the McDonald’s chain removing them from its burgers and wraps in many areas of India.
Center inflationwhich removes volatiles food and energy pricesit stayed below 6 percent for the fourth straight month.
According to the estimates of three economists, the core inflation was between 5.1 percent and 5.4 percent in Junecompared to 5.02 percent in May.
Indian government does not release core figures inflation.
Last month, the Reserve Bank of India kept its rates on hold for a second meeting in a row and said it would focus on anchoring inflation near 4 percent, the midpoint of his 2 to 6 percent target range. Economists polled by Reuters expect rates to hold steady through 2023.
“We expect the monetary policy committee to see through the near-term increase in food inflation and stay on long hiatus,” said Garima Kapoor, an economist at Elara Capital.
Sticky inflation will push Reserve Bank of India to raise rates yet again: Reuters poll
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