Retail inflation eases to 3.15 pc in July

Retail inflation eased marginally to 3.15 per cent in July on the back of softening fuel and light prices even as overall food prices moved up, government data showed on August 13, leaving room for the RBI to go for another round of rate cut in October.

Retail inflation was 3.18 per cent in June, while it stood at 4.17 per cent in the year-ago period (July 2018).

The overall food inflation, measured on Consumer Food Price Index (CFPI), moved up to 2.36 per cent during July from the revised 2.25 per cent print for June, as per data released by the Central Statistics Office (CSO) under the statistics and programme implementation ministry.

While lowering the key interest rate for the fourth time in a row earlier this month, the RBI had maintained its “accommodative” stance that meant an increase is off the table.

The central bank, which had reduced the rate unconventionally by 35 basis points this month, mainly factors in retail inflation in its bi-monthly monetary policy.

The CSO data showed that the rate of price rise in vegetables softened to 2.82 per cent during the latest month as against a rise of 4.66 per cent in June, while the prices of pulses and products went up to 6.82 per cent from 5.68 per cent.

In the case of fruits, the price trend showed upside movement with an inflation print of -0.86 per cent as against -4.18 per cent a month earlier.

Prices of protein-rich meat and fish rose at nearly the same level at 9.05 per cent (from 9.01 per cent in June); however, inflation in eggs eased to 0.57 per cent (against 1.62 per cent).

In the fuel and light category, deflation was witnessed with a print at 0.36 per cent, as against a rise of 2.32 per cent a month ago.

Retail inflation remains subdued with most of the components indicating not much variation compared to the earlier periods.

As per the latest sowing data maintained by the agriculture ministry, total acreage sown to all kharif crops so far has remained lower at 869.55 lakh hectares as against 918.70 lakh hectares in the year-ago period.

Agriculture Secretary Sanjay Agrawal said that the deficit in overall sowing area has improved compared to the previous week and the gap has come down.

Currently, the retail inflation is well below the RBI’s comfort level. The government has asked the central bank to keep inflation in the range of 4 per cent.