Retail price inflation declined to 10.02 per cent in June. However, it remained in double digits for the third month. Retail inflation in May stood at 10.36 per cent in May and 10.26 per cent in April.
The base effect of inflation in housing contributed to the fall in inflation. In fact, in rural areas, where there is no such category, consumer price inflation rose to 9.74 per cent from 9.57 per cent in May, official data showed on Wednesday.
In urban India, inflation fell to 10.44 per cent from 11.52 per cent in May.
Minister of State for Statistics and Programme Implementation Srikant Jena attributed the fall in inflation in urban areas to the higher base of the housing group index for June 2011, compared to May 2011. In June 2011, the housing index rose significantly to 106.2 points from 100.4 points in May 2011. Therefore, though the index rose to 117.5 points in June from 116.2 points in May, inflation year-on-year in housing declined substantially — from 15.73 per cent to 10.64 per cent.
Housing has a weightage of 22.53 per cent in inflation for urban areas and 9.49 per cent in the combined index for rural and urban areas. The housing group primarily includes house rent, and some sundry items like water charges and repair charges.
Food inflation in June remained in double digits. For rural areas, it stood at 10.41 per cent, compared with 10.16 per cent in May, while for urban areas, it was 11.52 per cent, compared with 11.29 per cent in May. Combined inflation for vegetables showed a slight rise —from 26.59 per cent in May to 27.6 per cent in June. Inflation for pulses stood at 9.34 per cent. It was higher in urban areas, where prices rose 9.34 per cent, while in rural areas, prices of pulses rose 8.55 per cent.
Inflation for fuel and electricity stood at 10.34 per cent. For urban areas, it stood at 12.55 per cent, while for rural areas, it was 9.08 per cent. Clothing bedding and footwear inflation stood at 11.04 per cent in June, compared with 11.36 per cent in May.
In June, wholesale price index (WPI)-based inflation stood at a five-month low of 7.25 per cent, compared with 7.55 per cent in May. Food inflation in June, according to the WPI-based index, stood at 10.81 per cent, compared with 10.76 per cent in May.
Economists say with food inflation in double digits, it is unlikely RBI would ease its monetary policy stance in its policy meet on July 31. In its policy review on June 18, the central bank had kept the repo rate and the cash reserve ratio unchanged at eight per cent and 4.75 per cent, respectively.
RBI Governor D Subbarao had said yesterday RBI looks at both CPI and legacy CPI, saying "theoretically" CPI should be a better measure of inflation than WPI. Adding: “The new comprehensive CPI does not have adequate history to support data analysis and to be used as a sole headline measure of inflation.”
At the same time, the Reserve Bank cannot ignore a price index which arguably reflects the most updated economic structure,” he had said.
For consumer price index-based inflation, data from 1,181 villages and 310 towns is collected and sent to the web portal of the Ministry of Statistics and Programme Implementation, which checks large variations in data through scrutiny tables. While India Post collects data for rural areas, the National Sample Survey Organisation collects data for urban areas.
