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India’s retail inflation eases to 3.69 % in August from 4.17 % in July

Lower food prices eased India’s retail inflation to 3.69 % in August from 4.17 % in July.

business Updated: Sep 12, 2018 18:47 IST
Agencies
Agencies
New Delhi
retail inflation,consumer price index,Reserve Bank of India
India’s retail inflation was 4.17 % in July.(AP File Photo))

Retail inflation cooled to an 11-month low of 3.69 per cent in August mainly due to a fall in prices of kitchen items, including fruits and vegetables, official data showed Wednesday.

The inflation based on Consumer Price Index (CPI) stood at 4.17 per cent in July and 3.28 per cent in August 2017.

CPI inflation was at 3.58 per cent in October 2017 and has remained above RBI’s targeted rate of 4 per cent since then.

The Reserve Bank of India (RBI) will be considering this set of data for formulating its next bi-monthly monetary policy on October 5.

The central bank has been mandated to keep retail inflation at 4 per cent level (with a margin of 2 per cent on either side).

Slowing inflation in food prices, which make up nearly half of India’s consumer price index (CPI), cancelled out price rises in imported goods stemming from the weakening rupee currency.

Food inflation slowed to 0.29 percent from a year earlier, against 1.37 percent in July.

Softening inflation could give Prime Minister Narendra Modi a boost as he faces general elections next year.

The rupee has fallen more than 12 per cent against the dollar this year to hit an all-time low of 72.92 on Wednesday. The tumble has sparked discontent in a country that relies heavily on imports for its fuel needs.

Nationwide protests over record petrol pump prices, partly a result of the rupee slide, disrupted businesses and schools this week.

The RBI, which next meets on October 5, has raised its benchmark rate by a total of 50 basis points at its past two meetings, to 6.5 per cent, while warning about inflationary pressures.

Core inflation, which excludes the volatile food and fuel sectors, was seen at around 6 per cent, easing slightly from 6.3 per cent in July, according to analysts.

The International Monetary Fund, in its annual report on India released in August, warned that average inflation was likely to rise to 5.2 per cent in the 2018/19 fiscal year from a 17-year low of 3.6 per cent in the previous fiscal year.

The IMF expects the central bank to gradually tighten monetary policy in order to tame inflation.

India’s annual economic growth surged to a more than two-year high of 8.2 per cent in the three months through June.

First Published: Sep 12, 2018 17:54 IST