In August, India’s retail inflation showed signs of improvement, slowing to 6.83% compared to July’s 7.44%, according to data released by the National Statistical Office (NSO). However, it remains outside the Reserve Bank of India’s (RBI) tolerance band.
On another front, India’s industrial output experienced significant growth, surging by 5.7% in July compared to the same month the previous year, as reported by the government’s data.
This marks the fourth instance this year of the retail inflation rate, also known as the consumer price index (CPI), exceeding the upper limit of the 4+/-2% band of RBI’s medium-term inflation target, and it is the seventh instance since July 2022.
The RBI primarily considers retail inflation when determining the benchmark interest rate, known as the repo rate.
Projections from the RBI suggest that India’s inflation will likely remain above 5% until the first quarter of 2024-25 and may reach 6.2% in the current quarter (July-September).
Food inflation in India saw a decline in August, dropping to 9.94% from 11.51% in July. Urban CPI slowed to 6.59% from 7.20% in July, while rural inflation decreased from 7.63% to 7.02% over the same period.