Rising inflation in India driven by higher food prices

India's retail inflation rose in June for the first time in five months, driven by a sharp increase in food prices, local media reports. Inflation stood at 5.08%, up from 4.75% in May, beating economists' expectations for 4.80%. Food prices, which account for almost half of the index, rose 9.36 per cent in June compared to a year earlier.

 

Vegetables rose 29.32 per cent due to high temperatures and floods in northern India. It is felt that vegetables will continue to face high inflation. The industry is concerned about high rural inflation and its impact on consumption and investment.

 

The Reserve Bank of India (RBI) has kept its key interest rate at 6.50% for eight consecutive meetings. RBI Governor Shaktikanta Das indicated that it is too early for a change in monetary policy until inflation approaches the 4% target.