The spurt in inflation in June was driven by a spurt in food inflation even as oil inflation has remained tepid. The inflation in June is higher than the last reported inflation of 5.84% in the month of March but lower than the imputed inflation for the months of April and May. However, a clearer picture on inflation may be clear only after full production resumes.

Analysts and economists are of the view that this was a clear case of divergence between retail and producer inflation as logistic challenges and supply chain constraints led to higher retail inflation. This is a key issue if you wonder why inflation is high even in the midst of weak demand. The answer lies in supply chain bottlenecks.