3Q Wealth

July13, 2023
CPI June
After declining to a 25-month low in May, India’s retail inflation increased in June. Prices for food had a major role in the recent spike, which is anticipated to continue in the next month. According to information issued on Wednesday by the Ministry of Statistics and Programme Implementation, the Consumer Price Index-based inflation rate was 4.81% in June as opposed to 4.3% in May. Food and beverage inflation rose to 4.63% during the month, from 3.35% in May. Core inflation—excluding volatile food and fuel—rose to 5.2% from 5.15% in May, according to Bloomberg. The kharif sowing was 8.7% lower on an annual basis as of July 7 as a result of the below-average June rainfall. Given that nearly 50% of the overall kharif planting occurs in the month of July, evenly dispersed rainfall in the current month across all areas would be crucial to replenish reservoirs and speed up the kharif sowing process. Amidst the ongoing excess rainfall in North India, the surge in the prices of perishables, particularly vegetables, is likely to harden the food inflation further in the immediate term. Besides, the impact of El Nino on monsoons and sowing in India needs to be carefully monitored,” said ICRA’s Chief Economist Aditi Nayar.
According to government figures, India’s industrial output increased by 5.2% in May compared to a year earlier. The manufacturing sector’s output increased by 5.7 % in May 2023, while the mining output rose 6.4 %. Robust growth was also registered amongst use based industries barring consumer durable and intermediate goods that saw almost flat growth at 1.1% and 1.6% respectively. IIP expanded at a much sharper pace of 19.7% in May 2022, which was due to the base effect post the Covid 19 pandemic.