NEW DELHI: Food price inflation in June eased to a nine-month low of 7.87% as temporary supply constraints due to nationwide lockdown eased. The retail inflation data, released after a two-month gap, stood at 6.09% for the month.
In May, food inflation stood at 9.2%. In March, CPI inflation stood at 5.84%.
“In view of the preventive measures and announcement of nation-wide lockdown by the Government to contain spread of COVID-19 pandemic, the price collection of Consumer Price Index (CPI) through personal visits of price collectors was suspended,” CSO said in its statement.
During the lockdown, prices were collected through telephonic call from the designated outlets in selected markets, which was supplemented by information collected during the personal purchase of field staff for the items being transacted from neighborhood outlets keeping in view the travel advisories, it said.
“As the various pandemic related restrictions were gradually lifted and non-essential activities started resuming operations, NSO collected prices from 1030 urban markets and 998 villages, for commodities that were available and transacted during the month of June, 2020. The data collected, however, did not meet the adequacy criteria for generating robust estimates of CPIs at the State-level,” the CSO ad.
Reserve Bank of India governor Shaktikanta Das on Saturday said the focus of the central bank will remain on reviving growth and restoring financial stability.
Monetary policy was already in an accommodative mode before the outbreak of covid-19, with a cumulative repo rate cut of 135 basis points between February 2019 and the onset of the pandemic. “Reversing the slowdown in growth momentum was the key rationale for this distinct shift in the stance of monetary policy, even as unseasonal rains caused temporary spikes in food inflation in the second half of 2019-20. Consistent with this policy stance, liquidity conditions were also kept in ample surplus all through since June 2019. The lagged impact of these measures was about to propel a cyclical turnaround in economic activity when COVID-19 brought with it calamitous misery, endangering both life and livelihood of people,” Das said.
Most economists expect the central bank to maintain its accommodative monetary policy stance until the economy recovers at least to the pre-covid levels.
Das said given the uncertainty regarding the evolution of the COVID curve, it was absolutely critical to anticipate the emerging economic risks and take pro-active monetary policy actions of sizable magnitude, using a comprehensive range of policy instruments to optimise policy traction.
“The fast-changing macroeconomic environment and the deteriorating outlook for growth necessitated off-cycle meetings of the Monetary Policy Committee (MPC) – first in March and then again in May 2020. The MPC decided to cumulatively cut the policy repo rate by 115 basis points over these two meetings, resulting in a total policy rate reduction of 250 basis points since February 2019,” he added.