The June retail inflation in India was recorded at 7.01 percent, according to government data released on July 12th, 2022. In May, consumer prices were estimated at 7.04 percent. The inflation rose near an eight-year high of 7.79 percent recorded in April. Annual retail inflation rose to 7.01 percent in June this year from 6.26 percent a year earlier. The Retail inflation also remained above the Reserve Bank of India’s tolerance band of 2 percent to 6 percent for the sixth month in a row, showed the data released by the government on July 12th, 2022. Core inflation (CPI ex food and fuel) eased to 6 percent YoY in June (vs. 6.1 percent YoY in the previous month) largely on base effect. Inflation in the transport & communication segment decelerated, in tandem with the movement in retail prices of petroleum products.

Samiran Chakraborty of Citi Research says, “Q1’FY23 headline inflation print and underlying trends are broadly in line with view & they retain our average FY23 headline inflation forecast at 6.9 percent YoY. We expect 35bps repo rate hike at August meet. Falling commodity prices and lower than expected June quarter inflation (7.3 percent vs RBI forecast of 7.5 percent) could make MPC refrain from a 50bps rate hike.”

Neelkanth Mishra of Credit Suisse says, “Incremental inflationary impulse eases helped by excise cut on fuels/fall in global palm oil prices, but overall upside risks to inflation persists with weakening INR, and high input costs for firms which can be passed through to consumers.”