Wholesale inflation reaches 16- month high in June

India's wholesale price inflation surged to 3.4% in June, the highest level in 16 months, up from 2.6% in May, driven by a sharp increase in food inflation to 8.7% and a nearly doubled rise in manufactured product prices to 1.43%, according to data released by the Union Commerce ministry on Monday. Positive rate of inflation in June 2024 is primarily due to increase in prices of food articles, manufacture of food products, crude petroleum & natural gas, mineral oils, other manufacturing etc, the report stated.
Pricier vegetables, cereals, and fruits spurred the rise in food prices paid by Indian consumers to a six-month high of 9.4% in June, escalating the headline retail inflation pace to a five-month high of 5.08% in June, from a revised 4.75% in May, the lowest in a year, according to recent official data.
Retail Inflation Likely to Hover Around 5%:SBI Research 
Recently according to a research report published by SBI, retail inflation, or the Consumer Price Index (CPI) in India, is expected to remain below or close to 5.0 percent in the remaining months of 2024-25, except for September.This forecast comes amidst a backdrop of various economic factors influencing the inflationary trends in the country.
The report indicates that retail inflation may temporarily exceed 5% in September. This spike is attributed to seasonal factors, including monsoon- related disruptions affecting food supply and prices. Monsoon rains often lead to fluctuations in agricultural output, impacting the prices of essential commodities. This seasonal effect is expected to be short-lived, with inflation returning to the projected range in subsequent months.
A recent survey conducted has revealed a significant increase in weekly spending on vegetables among Indian households. The data shows that six out of 10 Indians are now spending 50% or more on vegetables compared to previous months. This surge in spending is primarily attributed to a shortage of vegetables and fruits in mandis, leading to higher prices for fresh farm produce.
Key Takeaways:
●SBI Research forecasts retail inflation to stay near 5%,
●Rising food and fuel prices are major contributors,
●Global economic conditions and monetary policy play significant roles,
●Implications for household budgets, policy decisions, and investment climate.
Rising food prices continues to be a concern for Indian consumers, with the inflation rate in the food segment nearly doubling year-on-year in June. Food inflation almost doubled to 8.36 percent last month, compared to 4.63 percent in the same month of 2023, according to data.
Key Highlights: 
●Six out of 10 Indians are now spending 50% more on vegetables weekly.
●Shortage in mandis has caused a spike in prices of fresh produce.
●Tomato prices have surged to Rs 80-100 per kg.
●State governments are taking steps to prevent hoarding by traders.
According to information, the year-on-year inflation rate based on the all-India Consumer Price Index (CPI) was 5.08 percent for June 2024. The corresponding inflation rates for rural and urban areas were 5.66 percent and 4.39 percent, respectively.
Twelve states had inflation rates above India's overall rate of 5.1 percent in June. Odisha recorded the highest inflation rate at 7.22 percent, followed by Bihar at 6.37 percent and Karnataka at 5.98 percent.
"With the monsoon progressing satisfactorily and overall seasonal variations balancing out, we do not expect any significant deviation in the inflation outlook," stated a report from SBI Research authored by Soumya Kanti Ghosh, Group Chief Economic Adviser at the State Bank of India.

(State Correspondent)