New Delhi, July 13 (IANS) Economists on Monday said India’s headline CPI inflation at 4.38 per cent for June is in line with their forecast, adding that over the next two quarters, inflation is likely to remain range bound at 4-4.5 per cent, with food as the key swing factor amid uneven monsoon progress and El Nino-linked rainfall variability.

The commodities that posted the highest inflation during the month were silver jewellery which saw a 133.21 per cent jump in prices and gold jewellery which clocked a 36.82 per cent increase in prices. Overall food inflation in June stood at 5.32 per cent.

According to Madan Sabnavis, Chief Economist, Bank of Baroda, in the non-food category, the pass-through of higher crude oil prices to retail fuel prices contributed to higher transport inflation at 4.3 per cent.

“While cooling global gold and silver prices could moderate inflation in the personal care category, base effects will keep it elevated. Going ahead, we expect the current momentum in inflation to continue, with food prices likely to remain influenced by monsoon developments,” said Sabnavis.

Radhika Rao, Senior Economist and Executive Director, DBS Bank, said that June inflation was slightly above consensus, reflecting the continued normalisation of food prices and the pass-through of pump price increases implemented in mid-May.

“Markets are also focused on the spatial and geographical distribution of the ongoing southwest monsoon. Encouragingly, the nationwide rainfall shortfall narrowed considerably in July to 15 per cent, from over 40 per cent at the end of June, with key crop-producing belts across central and north-west India seeing improved rainfall,” said Rao.

According to Rajeev Sharan, Head of Research, Brickwork Ratings, upside risks stem from a potential crude rebound and sustained bullion strength, while a favourable monsoon could ease food prices and support continued RBI accommodation.

–IANS

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