Retail inflation decelerates in August, but remains above RBI's tolerance level

Cornelia Mascio
Settembre 16, 2020

The consumer price index (CPI)-based inflation came in at 6.69 percent for August, from 6.73 percent in July.

The retail inflation which is measured by the Consumer Price Index (CPI) for the month of July was also revised to 6.73 per cent from 6.93 per cent.

The Reserve Bank of India intends to keep inflation around 4%, a rate that was breached in December when it accelerated to 7.35%.

The Consumer Food Price Index (CFPI) or the inflation in the food basket eased to 9.05 per cent in the month of August.

On a year-on-year basis, the rate of increase in the prices was recorded in Kogi (17.29 percent), Bauchi (15.77 percent) and Ebonyi and Yobe (14.71 percent), while Lagos (11.45 percent), Kwara (11.22 percent) and Abuja (11.17 percent) recorded the slowest rise in headline year-on-year inflation. This hardening of consumer inflation above 6 per cent makes a further rate cut hard in RBI's monetary policy committee meeting in the first week of October, suggesting that the rate-cut cycle to propel growth may be paused.

India's economy now struggles to cope with low growth and high inflation five months into the Covid-19 pandemic. Aditi Nayar, principal economist at ICRA, said the RBI could take a cautious step in terms of monetary stance, in addition to a pause in repo rates, as inflation is unlikely to recede meaningfully this month. And will inflation ease going forward?

Separate official data released during market hours on Monday showed wholesale prices in the country rose 0.16 per cent last month, having remained in a deflationary mode for four months in a row.

According to the NBS, the rise in the food index was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fish, fruits, oils and fats and vegetables.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE