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Despite the marginal drop, the CPI is still over the 6% upper limit set by the RBI.
The CPI Inflation has been rising since September last year and remained above upper tolerance band of the Reserve Bank of India (RBI) for straight six months starting from January this year.
With a depreciation of more than 7 per cent this year, the currency exchange rate is slated to hit the low point of Rs 80 per dollar in India.
The dip in prices is likely to be temporary, economists say, as a heatwave in June has pushed up prices of vegetables, while the govt cut estimates of wheat production due to dry spells in northern India.
The monetary policy committee (MPC) raised the key lending rate or the repo rate by 50 basis points (bps) to 4.90%.
The WPI inflation has remained in double digit for the 13th consecutive month since April last year.
Adding to the challenges, there has been shortage of parts triggered by piling up of containers at Shanghai port due to strict lockdown in the city following the surge in COVID-19 cases.
The local currency also touched its record intra-day low of 77.63 to a dollar as losses in domestic stocks, concerns over weak growth, and persistent forex outflows negated the impact of a fall in crude oil prices.
As per the government data released on Monday, WPI inflation has remained in double digits for the 12th consecutive month beginning April 2021.
Due to the low electric vehicle adoption, high prices of lithium and cobalt have not directly impacted the industry in India.