India’s retail inflation movement, as measured by the consumer price index (CPI), showed positive signs in the month of July. According to data released by the Ministry of Statistics and Programme Implementation on Friday, the CPI eased to 6.71 per cent in the month under review as compared to 7.01 per cent in the previous month.
The lower retail inflation was mainly attributed to price cuts on edible oil and easing commodity prices globally, though it is still above the Reserve Bank of India’s (RBI) upper tolerance band.
The good news comes a week after the RBI’s decision to hike the lending rate for the third time in a series. Last week, the central bank hiked the repo rate by 50 basis points to tame inflation. However, it kept the inflation forecast unchanged.
As per the latest ministry data, 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.
The slowing of retail inflation gains significance as the RBI had warned last week that sustained high inflation could destabilise inflation expectations and harm growth in the medium term.
However, the bad news that is still hovering around the economy is the falling industrial output. 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, as per the ministry data released on Friday.