India’s Retail Inflation Rises to 4.81% in June, Highest Since November 2021

By Ashwini Nathany

Posted on July 13, 2023

India’s retail inflation rose to 4.81% in June, up from 4.7% in May, according to data released by the Ministry of Statistics and Programme Implementation on July 12. This is the highest level of inflation since November 2021.

The rise in inflation was driven by a number of factors, including rising food prices. The price of vegetables rose by 10.3% in June, while the price of fruits rose by 6.3%. The price of meat and fish also rose by 5.4%. The price of tomatoes has increased by over 300% in recent months form Rs.40 per kg a few months back to Rs.160 per kg.

Inflation is also being driven by rising fuel prices. The price of petrol rose by 14.3% in June, while the price of diesel rose by 13.9%. This has put a strain on household budgets, as people are spending more on fuel to get around.

The government has taken some steps to try to control inflation. In May, the government cut excise duty on petrol and diesel by Rs 10 per litre and Rs 5 per litre respectively. The government has also imposed a ban on wheat exports.

However, it is unclear whether these measures will be enough to bring inflation under control. The Reserve Bank of India (RBI) has said that it is closely monitoring the situation and will take appropriate action if needed.

In addition to the rising prices of food and fuel, inflation is also being driven by rising demand. The Indian economy is growing at a healthy pace, and this is putting upward pressure on prices.

The government is hoping that the recent measures will help to cool inflation. However, it is likely that inflation will remain elevated for some time.

Inflation of the past 5 years

Year	CPI Inflation (annual %)
2022	6.96
2021	4.55
2020	6.26
2019	3.97
2018	4.83

Impact of Inflation on the Indian Economy

The rise in inflation is having a number of negative impacts on the Indian economy.

• It is putting a strain on household budgets, as people are spending more on essential goods and services.
• It is making it more difficult for businesses to plan for the future, as they are not sure how much they will have to pay for inputs.
• It is leading to a decline in consumer confidence, as people are less likely to spend money if they are worried about the rising cost of living.

The government is hoping that the recent measures will help to cool inflation. However, it is likely that inflation will remain elevated for some time. This is because the underlying factors that are driving inflation, such as rising food and fuel prices, are likely to continue in the near term.

The rise in inflation is a serious problem for the Indian economy. The government is taking steps to try to control inflation, but it is likely that inflation will remain elevated for some time. The impact of inflation on the Indian economy is negative, and it is important for the government to take steps to address the problem.

What is the Indian government doing to control inflation?

The Indian government and the RBI are taking a number of measures to control inflation.

• Raising interest rates: The RBI has already raised the repo rate by 0.40% in May 2022 and is expected to raise it further in the coming months. This will make it more expensive for businesses and consumers to borrow money, which will help to slow down economic growth and bring down inflation.
• Export restrictions: The government has imposed export restrictions on certain essential commodities, such as wheat and sugar. This will help to reduce the supply of these commodities in the global market, which will help to keep prices up.
• Import subsidies: The government has also provided import subsidies on certain essential commodities, such as edible oil. This will help to reduce the cost of these commodities for businesses and consumers, which will help to offset the inflationary effects of rising prices.
• Improving supply chain management: The government is working to improve supply chain management for essential commodities. This will help to reduce bottlenecks and bring down prices.
• Promoting competition: The government is promoting competition in the economy. This will help to keep prices down.
• Enforcing anti-monopoly laws: The government is enforcing anti-monopoly laws. This will help to prevent businesses from charging excessive prices.

In addition to these measures, the government is also providing relief to the poor and middle class through measures such as increasing the minimum wage and providing food subsidies. The government is also working to improve the lives of farmers by increasing agricultural productivity and providing them with better access to markets.

The government and the RBI are confident that these measures will help to bring inflation under control. However, they also acknowledge that it will take some time for these measures to take effect.

In addition to the measures mentioned above, the government could also focus on improving productivity and reducing corruption. These measures would help to boost economic growth and make it easier for businesses to operate, which would help to bring down prices in the long run.

India’s Retail Inflation Rises to 4.81% in June, Highest Since November 2021