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Retail inflation above 6% for 6 months in a row, rising food costs a major concern now

The retail inflation in June was recorded at 7.01 per cent, improving slightly from 7.04 per cent in May.

Retail inflation stood at 7.01 per cent in the month of June while food inflation remained at an elevated level of 7.75 per cent. In May, they were 7.04 per cent and 7.97 per cent respectively. The consumer price inflation has now been above the Reserve Bank of India’s comfort level of two to six per cent for six months in a row.

However, it is not only India that is reeling under severe stress from inflation. And multiple geopolitical events have been responsible for this. Around 77 per cent of countries reported acceleration in inflation in 2021 and this proportion is expected to rise further to 90 per cent in 2022, the RBI said citing the International Monetary Fund’s latest projections.

“For advanced economies, against an inflation target of two per cent, and emerging market economies, against an average target of about three to five per cent, two-thirds are witnessing inflation above seven per cent,” the RBI added.

Prices of food items in India have also recorded a significant hike, compared to last year. Tomato, potato, and edible oil prices have shot up, affecting the common people.

Besides food prices, the cost of clothing and footwear, housing, health products, and education are also on a sharp rise. While prices of clothing and footwear rose 9.52 per cent in June 2022, health inflation stood at 5.47 per cent and education inflation remained at 4.51 per cent. However, fuel & light inflation stood at 10.39 per cent.

In early 2022, inflation was expected to moderate significantly to four per cent by the September-December quarter, with a projected inflation rate of 4.5 per cent for 2022-23. This was, however, significantly increased by the Russia-Ukraine war that began in February, which led to a sharp spike in crude, edible oil, and wheat prices.

Considering the elevated prices of some of the major commodities and mounting economic uncertainty, inflation is now projected at 6.7 per cent in 2022-23, with Q1 at 7.5 per cent; Q2 at 7.4 per cent; Q3 at 6.2 per cent; and Q4 at 5.8 per cent, the RBI underlined in its June 8 monetary policy meeting.

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