(MUMBAI) – On Monday, the data released by the Central Statistics Office (CSO) showed that the retail inflation of India, which is based on the Consumer Price Index (CPI) reduced to 7.31% in June, which was 8.28% earlier in May, and was driven by a relief in the food prices. On the other hand, the wholesale prices reached a four month low, and were recorded at 5.43% in June, which was 6.01% back in May. This is the lowest level of inflation observed after January 2012.
Moreover, the retail food inflation decreased to 7.97% in June. According to the data, the retail food inflation was recorded at 8.68% in rural areas, whereas, for the urban areas, it stood at around 6.57%.
In a research note, Care Ratings, said, “The decline in inflation recorded in June’14 can be viewed as being temporary. The deficient monsoons could potentially push up food prices in the ensuing month. Added to this is the risk associated with a rise in fuel prices with the ongoing political tensions in the oil producing regions of West Asia.”
The monsoon season started last month in India. However, because of less rainfall, the prices of basic food items, such as milk, tomatoes and potatoes, have already been driven up. This factor might lead to a delay in the decision of the Reserve Bank of India to reduce the interest rates and increase the flow of credit to the economy.