India’s headline retail inflation rate, as measured by the Consumer Price Index (CPI), eased to 6.71 per cent in July, as compared to 7.01 per cent in June, according to the data released by the Ministry of Statistics and Pragramme Implementation.
Easing inflation can be attributed to price cuts on edible oil and easing commodity prices globally.
Even though the CPI inflation has eased, it still remained above the Reserve Bank of India’s (RBI) upper tolerance band.
The overall goods inflation came in at 6.75 per cent as compared to 7.75 per cent in the previous month, while, inflation in vegetables was at 10.9 per cent in July.
Fuel and light inflation came in at 11.76 per cent.
Disruption in supply chain due to Russia-Ukraine war is pressurising domestic inflation.
Last week, the central bank has hike repo rate by 50 basis points to tame inflation, but kept the inflation forecast unchanged.
“With inflation expected to remain above the upper threshold in Q2 and Q3, the MPC stressed that sustained high inflation could destabilise inflation expectations and harm growth in the medium term. The MPC, therefore, judged that further calibrated withdrawal of monetary accommodation is warranted to keep inflation expectations anchored and contain the second-round effects,” RBI Governor Shaktikanta Das said during the monetary policy review.
The RBI projected inflation is at 6.7 per cent in 2022-23, with Q2 at 7.1 per cent, Q3 at 6.4 per cent, and Q4 at 5.8 per cent, with risks evenly balanced. CPI inflation for Q1:2023-24 is projected at 5 per cent.
Meanwhile, India’s industrial growth, as per the Index of Industrial Production (IIP), fell to 12.3 per cent in June against 19.6 per cent in May.
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