Economists noted that India’s headline CPI inflation for June, standing at 4.38%, aligns with their expectations. They anticipate inflation to hover around 4-4.5% over the next two quarters, with food prices playing a crucial role due to uncertain monsoon patterns and El Nino-related rainfall fluctuations.
Notably, silver jewelry prices surged by 133.21% and gold jewelry prices by 36.82% in June, contributing to overall food inflation reaching 5.32%. Chief Economist Madan Sabnavis from Bank of Baroda highlighted that the rise in transport inflation to 4.3% was driven by the impact of increased crude oil prices on retail fuel costs.
Madan Sabnavis further mentioned that while declining global gold and silver prices might ease inflation in personal care products, existing base effects would maintain inflation levels. He expects inflation trends to persist, with food prices heavily influenced by monsoon conditions.
Senior Economist Radhika Rao, from DBS Bank, observed that June’s inflation slightly exceeded expectations, reflecting the normalization of food prices and the effects of recent pump price hikes. Rao also emphasized the importance of the ongoing southwest monsoon’s distribution, noting a significant reduction in nationwide rainfall deficits by July.
Rajeev Sharan, Head of Research at Brickwork Ratings, highlighted potential risks of a crude oil price rebound and strong bullion values, while underscoring that favorable monsoon conditions could alleviate food price pressures and support the Reserve Bank of India’s accommodative stance.
